The Bankers’ Committee has warned Nigerians that interest rates will not be reduced anytime soon but will take a gradual process to realize.
Addressing journalists at the end of the 316th Bankers’ Committee Meting in. Abuja yesterday, the Managaing Director of Guaranty Trust Bank (GTBank) Mr. Segun Agbaje stated that “on the issue of interest rate, the current interest rate environment the CBN finds suitable if not the most desirable so where we are today, is that in the short to medium term, interest rates are likely to stay where they are as the fundamentals of the economies remain fixed.”
Agbaje noted that “there are many impediments to lower interest rates like rate of inflation, type of exchange rates desired, what the cost of funds of the banks are, cost of providing infrastructure, cost of providing personnel.”
All these he said “come into what is cost of funding before you determine what the margin is, even macro economic factors of a country also affect what interest rates are charged. There are so many variables that determine interest rate. Whether you live in lower interest rate environment we do not want interest rate that is below the rate of inflation.”
However, as the nation deals “with such things as interest rates and import substitution, you will start to see interest rates considerably move downwards” he said.
Segun Agbaje also stated that “with price stability at the fore front of the new Central Bank of Nigeria (CBN) regime, it means exchange rate stability as an initiative of the CBN will continue to be pursued.”
He commended the CBN for maintaining inflation at a single digits, he advised that “all the monetary policies should ensure that we continue to have single digit inflation.”
Speaking for the CBN, Mrs. Tokunbo Martins, Director Banking Supervision of the apex bank reiterated what Agbaje had earlier said that Emefiele is passionate about the reduction of interest rate, however she agreed that “it will be done gradually it is not something that can be done tomorrow. The CBN governor along with the banking industry will achieve this in the long run.”
She stated that the CBN governor Mr Godwin Emefiele is committed to financial system stability and as such “there will be zero tolerance for infractions no soft touch regulation or supervision.”
Regulation and supervision by the CBN under Emefiele she said, will be very intense.
For serial bank debtors who go from one bank to another with different names and guises taking money and not paying back Mrs. martins said “such people will not be able to get credit anywhere in the system and will be blacklisted.”
Philip Oduoza of the UBA disclosed that the biometric gathering exercise which is a means of identifying bank customers has already started.
So far about 10,000 customers he said have been enrolled for the biometric exercise and progress continues to be made as the roll out of customers started on Monday. The biometric exercise he said will assist in consumer lending to provide credit availability to people excluded from the banking system.
On the cash-light policy, Oduoza said the banking system has continued to make improvements on cash light and loans have continued to increase, number of transactions have continued to increase, and the amount has continued to increase as they have continued to see customers migrating from banking halls to using ATMs and electronic channels.
As a result of this development, the banks he said are ready to roll out nation wide from July 1, 2014 beyond the current states where it has become operational.
Ladi Balogun, Managing Director of First City Monument Bank (FCMB) said the CBN along with the Bankers’ Committee, have reiterated their commitment to the vision of the CBN governor of a people focused vision to ensure that the policies of the CBN and the action of the banking community impact favourably on the average Nigerian.
In addition, the developmental activities of the CBN he noted “will continue, with likely focus on agriculture, Small and Medium Enterprises (SME), we are also likely to see a sharper focus on power sector of ensuring that the existing power assets of the country can attain their installed capacity. Rather than moving funds to new capacity.”