News Column

Banks Agree to Interest Rates Cut

June 18, 2014

James Emejo

The Bankers' Committee yesterday said it was in support of the Central Bank of Nigeria's (CBN) policy to gradually reduce both lending and deposit rates but appealed for time until the macroeconomic conditions are conducive.

Briefing the press at the end of the 316th meeting of the committee in Abuja, the Managing Director/Chief Executive, Guaranty Trust Bank Plc, Mr. Segun Agbaje, alongside other banks' chief executives, said the proposed cut in rates would not happen overnight as factors such as inflation, the exchange rate, and cost of personnel, among others, still constituted a challenge to lowering the rates.

He said: "The current interest rate environment is not the most desirable. So where we are today and what I would consider the short to medium term is one in which interest rates are likely to stay where they are.

"But as the fundamentals are fixed and you deal with certain things like import substitution, you would start to see hopefully interest rates trending downwards."

Also, the Group Managing Director and Chief Executive, First City Monument Bank (FCMB), Mr. Ladi Balogun, said the committee resolved to pursue policies which are people-centric and which would improve financing to small and medium enterprises (SMEs), agriculture and the power sector.

He said going forward, power sector financing would be targeted at attaining the installed capacity of existing power assets rather than investing funds on new capacity.

Group Managing Director/Chief Executive, United Bank for Africa (UBA) Plc, Mr. Phillips Oduoza, said the committee also reviewed the ongoing cashless policy and biometric data scheme whose pilot phase was concluded last Friday.

He said the cash-lite programme, which is expected to be launched nationwide effective July 1, had recorded measurable success as more customers have migrated from the banking halls to electronic payment channels.

He said: "The volume has increased and the number of transactions have continued to increase and the amount has continued to increase. To this effect, we have concluded that we are going to roll out nationwide beyond the various states we are operating right now."

According to him, about 10,000 customers are currently enrolled in the biometric system while the rollout for the customers started on Monday, adding that a massive rollout for other customers would soon begin in addition to the cash-lite programme.

He said the biometric system was a major leap towards the acceleration of economic development and would assist banks in improving consumer lending for people who had been excluded from the banking system.

In her remarks, CBN's Director, Banking Supervision Department, Mrs. Tokunbo Martins, reiterated the central bank's zero tolerance for infractions, adding that there would be intense supervision of the banks while serial debtors would be denied credit and blacklisted.

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Source: AllAfrica

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