The committee comprise the top management of CBN, Nigeria Deposit Insurance Corporation (NDIC) and chief executives of banks. The Committee also decided to reduce limit on naira debit Visa and Mastercard. The limit represents the amount of dollars that card holders can spend or withdraw through the cards when they are out of the country.
Director, Banking Supervision Department, CBN, Dr. Tokunbo Martins disclosed this at a press conference at the end of the Bankers Committee held in Lagos. Also at the press conference are the Chief Executive officer of Union Bank, Mr Emeka Emuwa, Chief Executive of Standard Chartered, Mrs Bola Adesola, Chief Executive of Citibank Nigeria, Mr. Omar Hafeez, and the CBN Director of Corporate Communications, Alhaji Ibrahim Muazu.
Speaking on the decision to stop bad debtors from purchasing dollars from interbank market, Tokunbo Martins said, “We realise it is becoming increasingly difficult to get some debtors to pay up on their loans. So there was a lot of discussion on what can be done to make them pay up on their loans. So it was decided that one thing that we may do is to stop them from getting access to foreign exchange. Another thing that we also considered, that we might do going forward is to publish the names of borrowers that refuse to pay up their loans. All this is in bid to ensure continued safety and soundness of the banking industry.
“It is not all debtors. It is the bad, the chronic debtors, those ones that are just deliberately refusing to pay. Those are the kind of debtors we are talking about. The industry has a standard. We don’t want non performing loans to be more than five per cent of the total loans in the industry.
“Currently total loans in the industry is between N13 trillion to N15 trillion. Right now we have not reached that upper limit of five percent but we don’t want to get there and that is why we decided we need to come up with this measure. Currently the non performing loan in the industry is about 3.3 percent, but we don’t want to get to the limit of five percent.
“On whether we can stop the bad debtors from purchasing foreign exchange at the parallel market, there is no way we can do that, but that will come to them at a cost because it is much more expensive. What we are much concerned is the official market which is much cheaper.
“It is not only the bad debtors that would be stopped from purchasing foreign exchange and have their names published in the newspapers. It would be the bad debtor, the company, the directors of the company, the subsidiary, every member of the group. So the entire group will be subjected to that treatment.”
Speaking on the decision to reduce amount of dollar that holders of naira debit Visa and Mastercard can spend abroad, Emeka Emuwa said, “We also looked at the use of naira debit cards. We realise that people were using the cards in a manner they were not expected to use them. There were some arbitrage going on, and in order to continue to support the stability in the foreign exchange market. So it was agreed at the committee that the limit would be reduced for the use of the naira debit cards. You will still have, as a customer, unfettered access to your dollar account (cards) but the naira cards the limit will be reduced to a judicious level.
Adesola, Ecobank CEO, explained that, “This specifically applies to the use of these cards abroad. When they used abroad, the merchants have to be settled, even if it is ATMs, the provider, which may be Visa or Mastercard, we will have to be settled in foreign exchange.
”We found that they put a drain on the foreign exchange resources available to finance industries. And so there would be a reduction in the annual allowable drawdown using naira debit cards abroad”
Official forex market not coming back
Martins also dismissed the possibility of the CBN reopening the official foreign exchange market saying, “The RDAS window will not be coming back. The CBN Governor said it in the public before that the window is closed forever. So it is not coming back.”
Credit: Vanguard
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