Tag Archive | "Naira"

Nigeria prints three billion bank notes yearly’



Three billion pieces of currency notes are printed yearly by the Nigerian Security Printing and Minting Company (NSPMC), its Managing Director, Mr Ehi Okoyomon has said.

He said while portion of this figure is kept in vaults; the rest is circulated in the economy through the purchase of goods and services, financial transactions, tax payments, and other purposes.

Okoyomon however, failed to disclose how much the country spends in printing the notes.

He spoke yesterday at an e-Payment Thought Leadership Breakfast Series, organised by Intermarc Consulting.

The NSPMC boss said the Central Bank of Nigeria ’s (CBN) cash-less scheme would reduce the amount of naira to be printed by The Mint in the coming years and further reduce loss of the naira, occasioned by bad handling.

He noted that Nigeria was one of five countries in the world that spend huge sums to print its notes, adding that the other four countries included the US, Indonesia, India and China.

For the CBN’s cash-less policy to be effective and make desired impact, he said there was need for formulation of strategies that would push the initiative across the country. 

He enjoined stakeholders including the CBN, banks, service providers, e-payment operators to work in collaboration with the government for the scheme to be successful.

Okoyomon explained that the policy would not mean total non-usage of cash. “All over the world, statistics have shown that the use of cash is not reducing, in spite of e-payment drive, what only happens is that there is less physical cash transactions. Cash is still king,” he said.

The cash-less banking regime, permits a daily cumulative limit of N150,000 and N1,000,000 on free cash withdrawals and lodgments by individuals and corporate customers, respectively. Individuals and corporate organisations that make cash transactions above the limits will be charged a fee of N100/thousand and N200/thousand respectively while third cheques above N150,000 will not be eligible for encashment over the counter and would only be paid through the clearing house.

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Nigerian Banks now using Credit Reference Agencies

IN the recent past, it was easy for the well-heeled in the country to walk into many banks and obtain loans without collaterals or even the intention to repay.
But with the empowerment of credit bureaux by the Central Bank of Nigeria (CBN), chronicle loan defaulters are in for it.
Credit is the oil in which business runs. There is basically nothing wrong in granting or accessing credit to run a business. Such an act becomes wrong and almost criminal when one borrows without the intention of repaying.
It becomes even worse when such borrowed funds belong to a bank that holds same in trust for the public.
Basically, that was one of the things that went wrong with the nation’s banking industry last year leading to the removal of some banks’ managing directors.
To avoid the same pitfall, the Central Bank of Nigeria (CBN) recently gave life to its earlier directive that banks must comply with certain regulations as it concerns credit bureaux before granting loans to customers.
In order to effect the directive by the Central Bank of Nigeria (CBN) to engage the services of at least two credit bureaux before granting loans, banks have started writing to their customers seeking their consent to disclose information concerning their (Customers) banking relationship to any of the credit bureaux.
It would be noted that recently, the CBN had made it compulsory for banks and other financial institutions to partner with licensed credit bureau order to enhance the performance of their operations.
According to the circular signed by the apex bank’s Director, Banking Supervision, Samuel Oni, “following the release of the guidelines on licensing, operations and regulations of Credit Bureau, issued by CBN in October 2008, it has become imperative to issue this circulate directing banks and other financial institutions to partner with the licensed credit bureau in order to enhance the performance of their operations.
“Consequently, it is mandatory for banks and other financial institution under the purview of the CBN to comply with Section 5.4.3 and 5.4.5 of the guidelines on licensing, operations and regulations of the credit bureau in Nigeria.”
The sectors stipulated, “banks must have data exchange agreement with at least two credit bureaux, obtain credit report from at least two credit bureaux before granting any facility to their customers, and obtain quarterly credit bureaux for all previous loans/facilities granted to enable the determination of borrowers current exposure to the financial system.”
Based on the foregoing, the apex bank had stressed, “banks and their financial institutions are advised to comply with this circular with immediate effect as failure to do so will attract appropriate sanctions.”
As a fallout of this, part of banks’ consent to disclosure of information obtained by The Guardian over the weekend, explained to their customers that the information shall be used for business purposes approved by the CBN and any relevant statute, adding that as members of a credit bureau, the banks are under obligation to disclose to the bureau, credit information and any other personal information disclosed to them (banks) in the course of banker-customer relationship with them.
The banks explained to their customers also, the various implications of submitting such information to them.
Some of the implications, include that,
• Such a bank may collect, use and disclose to a credit bureau and that the credit bureau may use the information for any approved business purpose as may, from time to time be prescribed by the CBN and/or any relevant statute.
• The customer should understand that information held about him/her by the credit bureau might already be linked to records relating to one or more of his/her partners.
Such a customer may be treated as financially linked and his/her application will be assessed with reference to any associated records.
In addition, for any joint application made by the customer with any other person(s), new financial association may be created at the credit bureau, which will link the bank’s financial records.
• The customer warranty that he/she is entitled to disclosure information about any co-application or guarantor and/or any one else referred to by him/her, and to authorise the bank to search and/or record such information of a credit bureau about him/her and such co-applicant or guarantor or other person.
• You understand that an association will be created at the credit bureau, which will link your financial records.  You agree to indemnify and hold the bank harmless against all claims, fees, expenses, damages and liabilities against the bank relating to or arising as a result of disclosure of information about such a co-applicant or guarantor or other persons or any use of such information by the credit bureau in compliance with the provisions of any CBN guideline and/or relevant statute.
• You hereby release and discharge the bank from its obligations under the banker’s duty of secrecy and forswear your right to any claim, damages, loss etc or account of such disclosure to credit bureau or the use by credit bureau in accordance with the provisions of any CBN guideline and/or relevant statute.
The CBN had licensed three credit bureaux to help checkmate the activities of loan defaulters in the banking industry.
The three credit bureaux are, CRC Credit Bureau, Credit Registry and XDS Credit Bureau.   
Late last month, the Central Bank of Nigeria’s (CBN) policy on accessing information on borrowers before lending by financial institutions in Nigeria started yielding dividends with 21 out of the 24 banks in the country engaging the services of credit bureaus to that effect.
The CBN had in its guidelines for the licensing, operations and regulations of credit bureau in Nigeria in October 2008, issued directives to financial institutions to this effect.
A credit bureau is an institution that collates data on borrowers from various sources and makes it available to aid informed lending by financial institutions.
On the strength of this, a credit bureau can also assist financial institutions to reduce loan-processing time and cost, enhance informed lending decisions and most importantly, reduce the level of non-performing loans.
Revealing the compliance level of banks and other financial institutions to The Guardian over the weekend, the Managing Director and Chief Executive Officer of CRC Credit Bureau, one of the three CBN-licensed credit bureaus, Tunde Popola stated that from January this year till now, the compliance level by financial institutions has been high.
Citing his firm, he said that, 21 out of the 24 banks have signed on the services of CRC Credit Bureau, adding that, those 21 banks represent about 97 per cent of the banking system credit market and also have access to about 95 per cent of the borrowers in the nation’s banking system.
The implication of this development, The Guardian gathered, is that these 21 banks must have also signed on the services of another credit bureau in line with the apex bank’s directive in order to have an elaborate and informed data on current and prospective borrowers.
Apart from that, Popoola also disclosed that, Bank of Industry (BOI), over 25 Primary Mortgage Institutions, about 50 micro finance banks have signed on, stressing that, all these happened between January this year and now.
In August last year, the CBN had announced that five banks in Nigeria had high level of non-performing loans.
The five banks are Afribank Plc, Finbank Plc, Intercontinental Bank Plc, Oceanic Bank Plc, and Union Bank Plc.
According to the apex bank, the major findings included excessively high level of non-performing loans attributable to poor corporate governance practices, lax credit administration processes and the absence or non-adherence to the bank’s credit risk management practices.
Thus, the CBN said, the percentage of non-performing loans to total loans of these banks, ranged from 19 per cent to 48 per cent, adding that, the five banks will need to make additional provision of N539.09 billion.
Based on that, the apex bank had revealed that, the total loan portfolio of these five banks was N2.9 billion.
It added that margin loans amounted to N456.28 billion, while exposure to oil and gas was N487.02 billion, stressing that, aggregate non-performing loans stood at N1, 143 billion representing 40.81 per cent.
Meanwhile, the three CBN-licensed credit bureau’s had earlier written to the CBN on the implication of non-compliance of banks to the content of the guidelines on credit bureaus.
Instructively, the heavy loan portfolios of Nigerian banks are mainly due to non-performing loans, as stated by the apex bank.
These bad loans are usually from chronic loan defaulters.
To check this trend, the apex bank had licensed credit bureaus to enable financial institutions access information on borrowers that will enable them (banks), make informed decisions before lending.
Managing Director/Chief Executive of Credit Registry Services, Taiwo Ayedun said the most effective way for the CBN to address the problem of bad loans is to enforce its guidelines that bank should use credit bureaus.
He noted that the method of publishing bank debtors names by the apex bank has its own limitations, as a much more effective way is to ensure that those information make their way into a credit bureau’s information system, and banks as a matter of choice should check everyday because it is automated.
He stressed, “information-sharing is so fundamental in clearing up the financial system, as nobody will see evidence that somebody is owing elsewhere and is defaulting and you still go ahead and grant him loan.
“It is not possible. All you do is to tell the individual to go and pay up the loan he owes. But in the absence of information-sharing, banks will just be making ignorant decisions,” he submitted.

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