The nation’s deposit money banks may have grown their total loan portfolio to over N13 trillion, out of which 3.5 percent has been declared bad.
But the Central Bank of Nigeria (CBN) has threatened to have the names of the new defaulters – the companies, directors and their subsidiaries– published to get them repay the loans, just as it said the alarm raised was to begin the search for the bad debtors.
The CBN Director of Banking Supervision, Mrs. Agnes Tokunbo-Martins, who made the disclosure at the 321st meeting of the Bankers Committee in Lagos yesterday, said the regulator is also mulling other strategies to ensure repayment of the loans, including starving the defaulting companies of foreign exchange allocation.
She said the apex bank has managed to keep the banking industry safe and sound in collaboration with all the members of the committee, but noted it has become increasingly difficult to get the debtors to pay.
“So, it was decided that going forward, one thing that we would do is to stop them from getting access to foreign exchange. Another thing that we also consider is to publish the names of the borrowers that refuse to pay up. This is to ensure the continuous safety and soundness of the banking industry.
“It is not all debtors, it is the bad and chronic debtors, those ones that have deliberately refused to pay, those are the ones we are talking about. Now, in the industry, we have a standard, we don’t want NPLs to be more than five per cent of total loans in the industry.
“Total loans in the industry is in the region of N13 trillion to N15 trillion. Right now, we have not reached the upper limit of five per cent, but we don’t want to get there. That was why we decided that we need to come out with this measure. Currently the industry average of non-performing loans is at 3.3 per cent NPLs and we don’t want to get to five per cent, that was why we came up with this measure,” she said.
She pointed out that AMCON spent much to clear up toxic loans before now and there is need to make sure we are proactive and that we don’t go back to a situation like that, which started with non-performing loans of 2.5 per cent and three per cent, 3.3 per cent, until it went off hand.
The Managing Director and Chief Executive Officer of Union Bank, Emeka Emuwa, who also briefed the media on issues around naira debit cards, noted that there have been abuse of the $150,000 limit for customers travelling abroad, which also drains the scarce commodity.
“It is important that we take action now and not wait till it is too late. We did find that in a number of cases, people were using the cards in manners that were not expected. So, in order to sustain stability, what was agreed by the committee was that the limits for the use of the naira debit cards would be reduced.
“As a customer, if you have a dollar account, you will still have unfettered access to it, but for naira debit accounts, the limits would be reduced to more judicious levels. This specifically refers to the use of these banks’ products abroad because when they are used abroad, the merchants have to be settled.
“Even if it is ATMs, the service provider, Visa or MasterCard has to be settled in foreign currency and we find that it is a drain on the foreign resources available to finance our industries. So, there is going to be a reduction in the annual allowable draw down using naira debit cards abroad,” he said.
For the Managing Director of Citi Bank Nigeria, Omar Hafeez, the increasing need to stem challenges of identity and fraud in the system has made it critical that clients and account holders continue to proactively go for the Biometric Verification Number project, which is ongoing.
