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CBN bans bank debtors from new loans

By on May 6, 2014

The Central Bank of Nigeria has banned debtors of closed banks with non-performing loans of a maximum of N250m from accessing new facilities in any Deposit Money Banks in the country.

The Managing Director/Chief Executive Officer, Nigeria Deposit Insurance Corporation, Mr. Umaru Ibrahim, who made the disclosure in Lagos on Friday, said the CBN took the decision following a request by the NDIC.

As a result, Ibrahim said banks had been notified of the development and NDIC examiners would follow up to ensure strict compliance.

He said, “In view of this challenge being faced by the corporation, I am happy to inform you that following our request, the CBN has barred all debtors of closed banks with non-performing loans of a maximum of N250m from access to new facilities in any deposit money banks,” he said.

“The banks have been notified of this development and I, therefore, wish to rely on NDIC examiners to ensure compliance with this new directive. The names of the debtors will be populated through the CBN’s Credit Risk Management System and approved private sector credit bureaus.”

The NDIC CEO, who spoke in Lagos at the opening of the 2014 Bank Examiners’ conference, said that the rapidly-changing operating environment and the ‘complex’ future of banking had necessitated this year’s conference.

According to him, the NDIC has the task of securing depositors’ money, in addition to ensuring the safety and soundness of the financial system.

The Bank Examiners conference had the theme, ‘Sustaining a safe and sound financial system through effective banking supervision.’

He noted that the gathering would afford the corporation’s old and new staff members the opportunity to acquire new skills to discharge their demanding tasks, owing to the nature of the challenges in the banking sector.

He said, “I consider the theme of this year’s conference apt given the centrality of banking supervision in ensuring the safety and soundness of the financial system. Beside depositors’ guarantee, the corporation is actively engaged in bank supervision, distress resolution and liquidation.”

Ibrahim added that he was hopeful that the conference would impact positively on the “on-site and off-site examiners,” who are daily confronted with the challenge of delivering on the corporation’s mandate of banking supervision using best practices.

The chief executive officer, who said that radical reforms had taken place in the banking industry since the 2011 Bank Examiners’ conference, believed that the 2014 meeting would enable supervisors, operators and stakeholders to discuss topical issues that continued to shape the nation’s financial industry.

According to him, reforms such as Risk-Based Supervision have brought about significant improvements in risk management practices by banks. He added that supervisory and financial reporting approaches including Macro Prudential Supervision, among others, have been “substantially implemented” in the bid to strengthen the system.

Aside the opportunity the conference would afford the bank examiners to update their knowledge and skills in order to effectively discharge their duties, the managing director said the conference would equip the examiners in appraising the affairs of the banks.

 

[Punch]