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CBN read riot act to banks, warns ;No more non-performing loans

There is no room for money changers in the banking sector of the financial economy, the Central Bank of Nigeria (CBN), told banks on Tuesday.

CBN Governor Godwin Emefiele said the banks should be major players in growing the economy, and warned that the era of armchair banking was over.

According to him, the days of non-performing loans (NPLs) had become history in the country “as anyone who benefits from any facility must pay back”.

Adding bite to the NPL issue, Emefiele appealed to the judiciary to support efforts towards ensuring that bank debtors pay back what they owe.

Speaking at the opening of the 12th Annual Banking and Finance Conference, in Abuja yesterday, the CBN governor, represented by the Deputy Governor, Economic Policy, Dr. Joseph Nnanna, said: “We do not want the banks to be money changers. Banking is not banking if you only play in the government fixed income space.

“Banking becomes meaningful when you take liquidity excesses from your surplus centres and channel them into scarce areas, that way you are transforming liquidity into assets and you are growing the economy and creating employment.”

The era when banks deployed their assets in fixed income instruments particularly Treasury Bills (TBs) and Bonds at the expense of the real sector “is over”.

He charged the banking sector to live up to its core responsibility of stimulating the economy by advancing credit to the real sector to create jobs for teeming population.

Emefiele, who noted that the days of brick and mortar banking were gone, urged the banks to digitalise their operations.

He identified unemployment as the biggest challenge in the country and appealed to the banking industry to assist government in tackling the challenge.

Emefiele said: “Today, with our new generation banks, the players of this space are digital in nature. We have gone beyond armchair banking where players play safe. Today, the CBN is calling on the banking system to be alive to its responsibility. We cannot conceive an economy without banks and neither can we conceive banks without an economy.

“What do I mean by this?  What I am simply saying is that the days of armchair banking, playing in the treasury bills space- those days are right behind us. The CBN is bullish and we have in fact, taken our responsibility very seriously.

“In the past months, we have come with new initiatives. The loans to deposit ratio is aimed at transforming liquidity management into risk asset management and asset transformation.”

Describing unemployment as the most serious issue, Emefiele urged the banks to play a crucial role by supporting government in asset creation.

“We must support the government in creating jobs for the teeming population,” he said.

He implored banks to redirect their idle liquidity by transforming them into asset creation tools.

“We have also tried to de-risk the banking industry. The days of non-performing loans are behind us and we call upon the judiciary to assist us in this regard,” Emefiele said.

Going forward, he said: “We shall learn to borrow in the old fashion way; by paying back when we have accessed facility from the banks. As Nigerians, the future of our country is in our hands and that future must be defined by the banking industry. Without money, we go nowhere in any economy in the world: with money we can go places.”

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