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Reps threaten to withdraw govt funds from banks

By BusinessNews Staff on December 19, 2013

The House of Representatives Committee on Banking and Currency has threatened to withdraw all public sector funds with the Deposit Money Banks.

The Chairman of the committee, Mr. Jones Onyereri, made the threat when members of the committee visited the Nigeria Deposit Insurance Corporation during its oversight function.

Onyereri said owing to the declaration of huge profits by banks as a result of their investment of public sector funds, his committee had supported the withdrawal of 50 per cent of the government funds from the banks by the Central Bank of Nigeria.

He, however, expressed regrets that the banks had resorted to charging high interest rates to make up for the gap created by the withdrawal of public sector funds.

This, according to him, has constrained the growth of the real sector of the nation’s economy.

He, therefore, advised the banks to make concerted efforts on deposit mobilisation from alternative sources; pointing out that if the high interest charges continued, the committee would be left with no option than to push for a full withdrawal of public sector funds from the banks.

A statement from the corporation issued on Tuesday stated that the committee expressed the willingness to support the regulatory and supervisory authorities in preventing distress in the banking industry.

The NDIC, in the statement signed by its Assistant Director, Communications and Public Affairs Unit, Alhaji Hadi Birchi, also expressed worries over the level of unclaimed deposits by customers of failed banks.

The statement quoted the corporation’s Managing Director, Alhaji Umaru Ibrahim, as saying that in spite of the various sensitisation campaigns from 1994 to 2013, it still had N1.9bn unclaimed by depositors of 48 Deposit Money Banks in-liquidation.

He noted that the corporation was currently working on modalities that would enable it to identify and reach customers of liquidated banks who had yet to claim their deposits.

It was learnt that the unclaimed deposits, which are currently with the CBN, were small balances ranging from between N200 and N1,500 per customer.

But Ibrahim said the corporation was considering an advance payment of insured deposits once the licence of any insured institution was withdrawn by the CBN.

The MD told the committee that the initiative was intended to ease the level of hardship experienced by depositors in the event of bank closures.

He, however, pointed out that the initiative would require a robust and effective information system in order to capture the balance on the ledger of every depositor prior to the closure of any insured bank.

[Punch]

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