February 19, 2020 /08:42 AM / By Tony Chukwunyem
of New Telegraph / Header Image Credit: Africa Housing News
The Bankers' Committee has accepted a request from the Federal Government to partner with it in bridging the country's huge infrastructure deficit.
The new Director of Banking Supervision at the Central Bank of Nigeria (CBN), Mr. Bello Hassan, announced this while briefing journalists on the outcome of the Bankers' Committee meeting held in Lagos yesterday.
He also stated that the Bankers' Committee agreed that the CBN's Loan to Deposit Ratio (LDR) policy has been a success even as lenders were urged to continue to grow credit.
He said: "The 348 meeting of the Bankers' Committee discussed a number of topical issues in the industry. You recall that sometime last year, one of the key policies introduced by the CBN to increase lending to the private sector was the LDR. So the committee reviewed successes recorded on this LDR policy and urged the banks to continue to grow credit; they still have some room to be able to do that.
"The committee also reviewed the performance of NIRSA MFB, how it has been able to impact on the lower segment of the society. Also, the government extended a request to the committee of banks to consider the possibility of forming a public-private partnership in bridging the infrastructural gap. And to that extent, the committee considered coming in to see how they can finance about four roads."
Also speaking on the proposed partnership with the Federal Government, the Managing Director/Chief Executive Officer, FSDH Merchant Bank, Mrs. Hamda Ambah, said: "When the request extended to the chairman of the Bankers Committee, the CBN Governor, was discussed at this meeting, we all agreed that he understands that government alone cannot provide all the infrastructure in the country and that really we in the private sector, have to work hand in hand with the government to ensure that infrastructure needs to be provided for this country to move ahead.
"With that in mind, what was agreed was that we create a small committee among the CEOs to work with the CBN to identify those roads on which/where we would like to participate; come up with a framework which we will share with government as to how we intend to do that and then once we have agreed, we will be able to forge ahead."
The Acting Managing Director of NIRSAL Microfinance Bank, Mr. Abubakar Kure, who also briefed journalists at the event, said the bank has so far rolled out a total of 53 branches across the country and disbursed about N18 billion to about eligible 5,000 Small and Medium Enterprises (SMEs) since it commenced operations in February last year.
He also announced that the Bankers' Committee, during the meeting, approved an increase in the paid up capital of the bank from N5 billion to N7.5 billion.
NIRSAL MFB is a brainchild of the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL), the Bankers Committee and the Nigerian Postal Service (NIPOST).
The Bankers Committee provided the set-up equity capital and owns 50 per cent of the bank, while NIRSAL and NIPOST own 40 per cent and 10 per cent respectively. The bank was set up to leverage on NIPOST offices in the 774 Local Government Areas (LGAs) of the federation and the FCT.
According to Kure, following the increase in its paid up capital, the bank intends to increase the number of its branches to 120.
Giving more details of the committee's discussions on the LDR policy, the Chief Executive Officer, Guaranty Trust Bank (GTB), Mr. Segun Agbaje, said the policy was one of the most successful things achieved by the industry last year.
He said: "Part of what is needed to stimulate any economy is lending and credit. When the LDR was first fixed at 60 per cent, we thought it was monumental. But, as you can see, people have approached it and now it is 65 per cent. I think it is very critical not only to the banking industry, but to Nigeria as a whole, that this continues.
"From our opinion or perspective as practitioners, this is one of the most successful things that were done in 2019. Look at how much credit was available in a six-month period. And consumer credit has grown very well; the corporates have also had more credit. And for any economy to grow, the SMEs and retail segment must be availed with credit and I think we are doing that very well."
The GTB boss stated that most lenders were likely close to 60 per cent in terms of LDR ratio, adding that lenders would push themselves to ensure that they meet the CBN's 65 per cent LDR target.
He revealed that as a result of the LDR policy, consumer credit now constitutes about 10 per cent of most banks' loan books.
The post Banks partner FG on bridging infrastructure deficit first appeared in New Telegraph on February 19, 2020