GOVERNOR, Central Bank of Nigeria (CBN), Mr Godwin Emefiele, on Thursday, said Nigeria will not consider the option of depreciating its currency at this time.
He made this known when he unveiled his vision for the apex bank, at a maiden media briefing, held at the corporate headquarters of the bank, in Abuja.
Also, serial borrowers moving from one bank to another to without having intention of paying back granted loan are in for a hard time, as the apex bank promised zero tolerance for such fraudulent practices.
The bank also promised to pursue a gradual reduction in key interest rates, maintnain exchange rate stability, strenghten risk-based supervision mechanism, build specific expertise in banking supervision, abolish fees associated with limits on deposits and other measures designed to ensure price and financial system stability.
Emefiele, while highlighting the policy directions, also promised to manage an apex bank “that is professional, apolitical and people-focused, adding that the apex bank, in pursuit of its zero tolerance policy on fraudulent borrowing, would collaborate with comercial banks to significantly improve the credit culture in the Nigerian banking system.
“The CBN focus will be directed at serial debtors who access loans from diffrent banks and default on all of them, even when they have the means to pay. Going forward, the CBN will work towards reducing the effect of information asymmetry in the credit market,” he stressed.
He said the bank would strenghten the sanction system to include blacklisting of companies and individuals that had been found to be serial loan defaulters, adding that their names would be circulated in the banking system to guide banks in identifying bad borrowers and deny them access to credits in the banking system.
He also said the apex bank would implement stringent loan provisions and penalties for banks that violated the provision, while it would also establish a national credit scoring system that would improve access to information on borrowers and assist to make good credit decisions.
Emefiele said he would start with championing policies that would promote the sustainability of hard-earned macro-economic stability.
Noting that high interest rate creates a pervasive incentive for commercial banks to simply buy virtually risk-free government bonds rather than lending to the real sector, the CBN governor said the bank would carry out a gradual reduction in interest rates.
To enhance financial access and reduce cost of credit, he said the bank would pursue policies targeted at making Nigeria’s Treasury Bills rates comparable with other emerging markets and, by extension, pursue a reduction in lending and deposit rates.
In view of the high import-dependent nature of the economy and the significant exchange rate pass-through which could exert pressure on the Naira and considerable inflationary pressure, the governor said the CBN key policy now would be to maintain exchange rate stability.
He said the CBN hoped to sustain effective management of potential threats to financial stability and create a strong governance regime conducive for financial intermediation, innovative finance and inclusiveness.
To shore up reserves, he said the bank would engage the fiscal and political authorities and other stakeholders, with a view to improving the policy buffers which will further create space for the CBN to implement monetary policy using limited instruments.
On payment system, he said the cashless policy would be better aligned to take care of customers’ complaints in terms of charges on cash deposits, adding that all charges on deposits had been stopped with immediate effect.
He, however, said charges on withdrawal, in view of their eventual elimination, remained sustained at the current three per cent for individual transaction exceeding N500,000 and five per cent for corporate transactions exceeding N3 million.
On the second aspect of his policy, which he christened Development Banking, Emefiele said additional measures would be required towards identifying productive sectors of the economy and channeling credit towards the sectors, while imposing proper monitoring and performance measures to ensure that the goals of increased employment and poverty reduction were attained.
Unfolding the bank’s agenda for development finance, Mr Emefiele said some of the apex bank’s functions in this regard would include credit allocations and direct interventions in key sectors of the economy such as power, agriculture, oil and gas and health, among others.
Noting that funding for SMEs in Nigeria had largely been viewed from a social development perspective, with the goal to reduce poverty through job and wealth creation and which has put the responsibility on government, the CBN governor said a business approach for funding SMEs was being proposed.
On agriculture, he said the CBN would revisit the goals and implementation of the intervention programmes to ensure that high value addition was obtained from funds provided.
On primary mortgage institution, Emefiele said the CBN was part of the major stakeholders working on the mortgage refinancing programme, adding that there werew things still needed to ensure the success of the programme.
Stressing further on poverty reduction, he regretted that many Nigerians aged 15 to 30 were unemployed, adding that the bank was working at creating jobs to resolve the issue.
He also promised that the bank would support efforts at domesticating oil and gas resources, to ensure more revenue for the country.
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