CIBN chief laments banks’ high rates, neglect of real sector
The Chartered Institute of Bankers of Nigeria (CIBN) has joined the growing number of observers and calls for concerted efforts to tame high interest rates charged by Nigerian banks.
Describing it as among the world’s highest, he also lamented that banks have become engrossed in “quick wins,” supporting trade and commerce without significant attention to the growth of the real sectors of the economy.
The President/Chairman of Council, Chartered Institute of Bankers of Nigeria (CIBN), Prof. Segun Ajibola, made the observations at the third inaugural lecture of Caleb University, Imota, Ikorodu, Lagos State.
The don noted that fraud and other malpractices are on the rise on a daily basis through collusion and insider’s abuse, a situation that depicts loss of integrity among practitioners and tends towards confidence crisis.
“The failure of banks to lend to agriculture, small and medium scale enterprises and micro businesses account for the weak performance of the economy over the years. Bankers demonstrate ostentatious lifestyles, largely at variance with the dictate of the time,” he said.
Speaking on the theme: “Rhythms and Riddles of Bank Credit: Synergies and Dislocations in Nigeria’s Economic Growth,” he pointed out that criticisms have trailed banking business, banks and bankers in Nigeria.
Noting that banking originated as a noble profession with trust as a key ingredient, he said: “The ecumenical origin of banking is well known to most of us. The Goldsmiths of old were entrusted with precious metals and with time, the receipts evidencing the safe keeping of gold with them became an instrument of exchange for commercial transactions, replacing the age-long trade by barter.
“Banking thrives on trust and these early progenitors of the modern-day banking architecture never betrayed the trust and confidence reposed in them,” he said.He added that banks’ competition with one another in pursuit of high profits, is often at the expense of the customers, reiterating that financial intermediation occupies the center stage in the business of banking and finance.
“When properly carried out, it assures the realisation of the oft-mentioned Keynesian multiplier effects in the economy,” he said.
According to him, bank credit is a pre-requisite, necessary, though not sufficient condition for sustained economic growth in Nigeria, hence, banks must continue to play this critical intermediating role in the economy by creating a veritable link between the surplus funds units and deficit funds units of the economy.
He warned that the current apathy towards lending to the real sector in favour of short-term high yield investments is not helpful for the long run growth and development of the economy, advising banks to redefine their lending behavior to favour longer tenor loans.
“Indeed, long-tenored loans are more impactful to the real sector like agriculture and manufacturing. Banks should restructure their operations and business templates to directly source longer-term funds in the form of equity, debentures, bonds, tenured deposits to enable them to lend for a longer duration.
“The current situation wherein bank deposit portfolio is skewed towards short-term deposits constrains their ability to lend to most sectors of the economy for the desired tenor.
“They should continue to engage staffers of right skills and competencies in lending, devout more attention to capacity building in the relevant areas and adhere strictly to the rules of the game as contained in the relevant regulatory policies, guidelines and programmes,” he added.
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