Are Nigerian Banks Stable? CBN moves to curb excessive charges in Banks

Nigeria banks stable, says NDIC

Nigerian Deposit Insurance Corporation (NDIC) Deputy Director for Bank Examination, MrAbdulhameedAliu, said this at an ongoing workshop for business editors and finance correspondents by the Corporation in Yola on Tuesday that the country’s banks remain stablein spite of a negative rating on Nigeria by global credit rating agency, Moody’s.

The News Agency of Nigeria (NAN) reports that Moody’s Investors Service (Moody’s), one of the global credit rating agencies, on December 4 changed its outlook on Nigeria’s ratings to negative from stable.

According to it, Nigeria’s weak operating environment poses a challenge to the banking sector in maintaining the recent improving trend, particularly as regards asset quality, given the increasing bank lending.

Aliu at the workshop with the theme,”Nigerian Banking System Stability: Tackling Emerging Issues,” said that the regulators, which included the NDIC and the Central Bank of Nigeria (CBN), had put in place frameworks that would continuously ensure that the banking industry remains strong.

He said that the commercial banks’ Capital Adequacy Ratio (CAR) which is a measurement of bank’s available capital expressed as a percentage of its weighted exposures, had improved from 10 per cent to 15 per cent, higher than the right per cent threshold.

The deputy director said that the development meant that Nigerian banks were insulated against some level of risks.

He noted that the regulator had come up with electronic template that monitors excessive charges among banks. He said, “We have even gone beyond doing these things manually; we have a template that we send to these banks, they are IT driven. It is a software that we developed. Once the bank slots in the variables, the results will come out and there is a red flag. So, anyone that has violated the articles, the system generates it.”  According to him, the idea behind the template is to ensure that banks do not overcharge customers.

“We don’t just wait until customers complain, we request inputs from these banks, they tender their returns and we advise them.

“We don’t wait for customers to complain, but where customers even complain, we investigate that,” he added.

On non-performing loans, Aliu also disclosed that those days when insider-related abuse was rampant was over.

According to him, International Financial Reporting Standards (IFRS) has mandated the banks to always explain in their books facilities that are performing or not as classified or not classified.