Shade, a petty trader sees no reason for her to have a bank account. To her, savings account is just a way for banks to collect money from the poor to enrich their pockets. She cites examples of friends who have opened accounts in banks and their monies had diminished with time as banks deducted charges.
Nigerians are generally very prudent and would want to have some form of benefit in whatever venture they go into. That is why many would want to know what they will gain when they open accounts with banks.
In recent times, on deposits interest rates have not been as attractive rather banks had introduced various charges that discouraged prospective bank customers.
This had also been a challenge for the financial inclusion policy of the Central Bank of Nigeria (CBN). However recent policies by the apex bank are geared towards reversing this trend.
Some of such policies include the reduction and gradual phasing out of COT, the cancellation of N100 ATM withdrawal fee, mobile money, agency banking amongst others.
More recently, the Monetary Policy Committee of the CBN, slammed a 50 per cent Cash Reserve Requirement (CRR) on deposits from the public sector, while CRR on other deposits remain 12 per cent.
The new monetary policy mandates banks to keep 50 per cent of public sector funds, which comprise deposits from all tiers of government as well as ministries, departments and agencies (MDAs) with the CBN.
Over time, banks have become overly dependent on deposits from the public sector which comprise of federal, state and local governments as well as parastatals and MDAs. These deposit, according to the apex bank have not done much good to the economy as the government funds have created a huge liquidity in the system.
According to CBN Deputy Governor, Financial System Stability, Dr. Kingsley Moghalu, banks had been “banking on the perverse incentive of government deposits which they then turn around and lend to government and the CBN (in this case through Open Market Operations) at extremely profitable rates for too long.”
This, he insisted, was not “real banking and creates structural bottlenecks for increased credit to the private sector”.
In other words, banks are being told to source for funds outside the public sector. They are to mobilise deposits from the private sector and the general populace. They are to bring in more people into the banking sector even as they mobilise these funds.
According to the Acting Director General of the Manufacturers Association Mr Rasheed Adegbenro, there are more funds outside the banking sector, particularly amongst the populace than there is within the banking system.
This policy, he explained would engender banks to intensify their deposit mobilization, and as such increase interest rates on deposits as incentives.
Moghalu had explained that the policy would benefit the banking industry ultimately by creating an incentive for banks to look for other deposits from the real sector and individuals at competitive deposit rates.
“We often see lending rates rise in response to the Monetary Policy Rate (MPR) set by the CBN in its efforts to tighten money supply to reign in inflation, but a very little corresponding increase in rates banks pay depositors”, he said.
Apart from increase in deposit rates, the policy is also expected to increase banking industry lending to the private sector, rather than taking deposits from the government to loan back to the government.
The Coordinating Minister of the Economy and the Finance Minister, Dr Ngozi Okonjo-Iweala in an interview last weekend expressed worry over the dwindling banking sector credit to the private sector in the last six years.
According to her, “credit to private sector went up a bit in 2008 and 2009, but has gone down precipitously since then. Credit to the private sector as a percentage of GDP in 2007 was 25.32 per cent; it went up in 2008 to 33.9 per cent; and in 2009, it rose again to 38.6 per cent.
“But in 2010, it went down to 24.9 per cent; also in 2011, it went down to 21.1 per cent, while in 2012 is stood at 20.84 per cent”, she lamented.
To Adegbenro and the Director General of the Lagos Chamber of Commerce and Industry (LCCI) Muda Yusuf, the policy will also ensure a tight liquidity situation which often enhances the stability of naira exchange rate and the moderation of inflation.
-@Leadership.ng
© anu for Royal Times of Nigeria Newspaper, 2013. |
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