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We Cannot Force Banks To Engage In Lending – CBN

By on January 8, 2013

The Central Bank of Nigeria (CBN) may have admitted its lack of regulatory prowess in the area of banking supervision when it said that it could not force banks to engage in lending.

Director, Corporate Communications, CBN, Mr. Ugo Okoroafor, made the comments whilst speaking to journalists yesterday.

He said, “The CBN cannot force any bank to lend to a particular customer; we can only encourage them like we have been telling them to lend to the real sector. If you have identity as a customer, definitely you will get loans from banks. You cannot tell the banks to lend to someone without identity. Besides, there are other issues affecting lending that the CBN cannot control.

“We should also look at the challenges the banks are facing that are not making them lend like they used to. The CBN, on its part, is using its monetary tools to ensure that the banks lend to the critical sectors, but there are fiscal and security issues to this too. It is when all these things come to play that you see things working perfectly.”

According to FSDH analysts, the CBN would have to increase its monetary easing in the economy in order for small businesses to enter the credit cycle.

It said, “In our opinion, it is now time for the Monetary Policy Committee to consider monetary easing in order to boost growth and complement its effort of ensuring that credits flow to some select sectors of the economy, such as power and aviation. The activities of the small scale industries are negatively impacted by the current high interest rate in the country.”