By Agency Reporter
The Central Bank of Nigeria will continue to create a level playing field in the banking sector to ensure that the interests of the banks and consumers are protected, a director of the bank has said.
The Director, Financial Policy and Regulation, CBN, Mr. Chris Chukwu, told the News Agency of Nigeria in an interview in Johannesburg on Tuesday that the apex bank was looking at the overall guide to bank charges, including COT, with a view to achieving more fairness.
Chukwu said, “We are looking at all the aspects of banking as we will like to level the playing field. We like the banks to be profitable but we also want the consumer to be comfortable with the charges and their relationships with the banks.
“What I can tell you is that we have a consumer financial protection unit in one of the departments of the CBN and they are looking at the overall guide to bank charges including COT. It is being reviewed as we speak,” he said.
The CBN director said that, so far, banking reforms put in place had been able to improve the confidence of consumers in the system and there was the need to build on the gains.
Consumers have more confidence in the banking system today than they had two years ago and we are still building on that as it is not a one off thing,”he said.
Chukwu, who noted that the banking reforms had started yielding desired results, said that prudential guidelines put in place had helped in the area of risk management and corporate governance.
He explained that granting loans based on the source of repayment rather than merely on collateral would give banks a better chance of collecting their loans rather than liquidating assets to get repayment.
Chukwu said measures were being put in place to ensure the sector did not go through what it went through in the past.
The CBN director is in Johannesburg to participate in an Africa International Banking Seminar organised by Standard Bank.
In a paper presented at the seminar, Chukwu had given a background of events that led to the present reforms in the Nigerian banking sector and steps put in place to stabilise the system.
He recalled that the huge inflow of foreign exchange from the unprecedented increase in oil prices from 2004 to 2008, the accompanying robust economic growth, and appreciable level of foreign direct investment inflows, all resulted in huge liquidity in the economy, which the real sector could not absorb.
Chukwu said the liquidity found its way into the property and stock markets, which created the assets bubbles of that era, noting that with huge capital and excess liquidity, banks came under pressure to create risk assets and ventured into non-banking businesses.
He explained that poor risk management, major failures in corporate governance of banks; lack of investor and consumer sophistication and inadequate disclosure/ lack of transparency by banks regarding their financial condition among others created problems in the sector.
Chukwu said remedial as well as long-term measures in the current reforms had been able to enhance the quality of banks and establish financial stability in the country while also showing zero tolerance for infractions.
Source: Punch
