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Reps Mull N20m Per Day Fine on Banks for Insider Abuse

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Jones Onyereri, chairman of the house of representatives’ committee on banking and currency, has said that banks may pay as high as N20 million per day as fine for infractions like insider abuse.

 

Insider abuse includes the broader range of actions where an insider takes action or fails to take action; where the bank is harmed, takes on additional risk, or loses an opportunity; and where the insider or a related party somehow benefits because of his position.

 

Onyereri told the Cable, on the sidelines of the ongoing Spring meetings of the International Monetary Fund and World Bank Group, that the current volume of non-performing loans (NPLs) is “a worse grave situation”.

 

Central Bank of Nigeria (CBN) recently said that insider abuse in banks is a major cause of fraud in the banking industry.

 

Also in its recently released World Economic Outlook, the IMF expressed concerns about deteriorating loan quality in Nigeria saying it could affect the “the ability of the banking sector to support growth in these countries and raise the risk of costly recapitalization.”

 

“That’s why the government introduced AMCON. I think that we are in a worse grave situation, that’s the honest truth because the non-performing loan is far beyond the usual industry threshold and for me it is embarrassing,” the lawmaker said.

“That’s why we have touted the idea that we won’t allow AMCON too. If you look at what we are doing especially in the house of representatives, we are mending the BOFIA act to curb as much is within reasonable limits the whole idea of non-performing loans. The core of non-performing loans is insider abuse.

 

“They give themselves loans far in excess of the accepted value. What we have at present in the BOFIA is a situation where if there is any infraction, they pay as little as N100,000 or N1000 and any bank can afford that if they have to pay N1000; it means nothing to them.

 

“Now we have increased it to the extent that thinking about committing such infractions will be scary to anybody that intends to do so. If you know that you need to pay as much as N20 million a day for every day that you continue to have that infraction, you won’t dare do any of those things.”

 

Onyereri said it is “absolute irresponsibility to have a banking supervision department” and still have a huge volume of NPLs.

 

“The second one which must be sounded very loud and clear is that it is absolute irresponsibility to have a banking supervision department and you still have huge volumes of non-performing loans because every day you are supposed to have on the site and offsite inspection of the bank books so why are they not doing that?

 

“You will see it clearly that this loan is not backed by any collateral or didn’t follow due process so why would you approve it? And even if you do because along the line businesses can get bad, but if you monitor adequately, you’ll be able to curb this before it gets so bad.

 

“That’s why it’s also good for us to strengthen NDIC so that a joint supervision with the CBN will guarantee that we reduce this non-performing loans.”

 

The lawmaker said the report will be released soon and the amendment will be signed into law.


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E-Financial

CBN Licenses Unified Payments as Second Provider for PTSA Services for Nigeria

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Central Bank of Nigeria (CBN) has awarded the country’s second Payment Terminal Service Aggregator (PTSA) license to Unified Payments, Nigeria’s premier financial technology company, following a rigorous and transparent process,

CBN Licenses Unified Payments as Second Provider for PTSA Services for Nigeria

The move is targeted at enforcing existing requirement that all transactions from point-of-sale channels in Nigeria must go through a licensed Payment Terminal Service Aggregator (PTSA).

The CBN is enforcing the laws to clamp down on financial crimes and other market misconducts and it aligns with the CBN’s objectives to fully track all electronic transactions in Nigeria, given the propensity of using such transactions to fund insecurity, violent crimes, banditry, kidnapping as well as other vices.

According to one analyst, “By awarding a second PTSA license, the apex bank has proactively responded to industry operators who had expressed serious concerns about channelling all transactions through a single aggregator, the Nigeria Interbank Settlement System PLC (NIBBS), as has been the case for some years.

“With the new policy direction, payments service providers would henceforth route all transactions through either of the two licensed Companies.”

Other financial analysts and industry players have commended the Central Bank, affirming that “the move can be a massive step in the right direction. They also commended the open, transparent, and inclusive manner via which the selection process was managed, and the license awarded.

“The selection process, which lasted for months, began with an invitation for qualified organisations within the payment industry to submit an Expression of Interest document, alongside other requisite documentation and additional capital requirement of N1 billion.”

 

The new management of CBN decided not to give the license out without going through an open process – and for the first time in licensing a payment service provider – the apex bank went through a public bid process outlined in its publication of Friday, January 5, 2024, in different national newspapers. At the end of the process, Unified Payments emerged as the most preferred service provider.

Unified Payment Services Limited, also called Unified Payments or UP, is a shared service provider within Nigeria’s financial technology sector owned by a consortium of Nigerian banks. For over 26 years, the firm has provided payment technology to banks and other industry operators. The first and only non-bank entity that is a principal member and licensed acquirer of all of American Express, Mastercard, Visa, UnionPay and Payattitude. Unified Payments facilitates both local and international transactions.

Formerly known as ValuCard Nigeria Plc, Unified Payments led the way to introduce POS payments in Nigeria under its card scheme known as ValuCard which is the first payment card to be issued in Nigeria. The company later transformed into a scheme-neutral and option-neutral service provider enabling transactions under different schemes.

The company has continued to provide leading payment technologies and services, enabling different operators to leverage its capabilities and licenses, enabling prompt and seamless transactions.

Among the shareholders of Unified Payments are First Bank, Access Bank, United Bank for Africa (UBA), Guaranty Trust Bank Plc, Zenith Bank and Fidelity Bank. Other shareholders are Citibank Nigeria Limited, Ecobank of Nigeria Plc, First City Monument Bank Plc, Keystone Bank Ltd, Polaris Bank Ltd, Stanbic IBTC Bank Plc, Sterling Bank Plc and Wema Bank Plc.


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CIBN says Recapitalization will Empower Banks to Lend more to Economy

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Chartered Institute of Bankers of Nigeria, CIBN, has expressed support for the ongoing banking recapitalization exercise saying it will empower banks to lend more to the economy.

CIBN President, Dr. Ken Opara stated this yesterday while speaking at the annual lecture of the institute in Lagos, with the theme “Improving Availability of Credit in the Nigerian Real Economy: The Critical Importance of Liquidity.”

Okpara noted that the volume of credit to the real sector activities namely agriculture, manufacturing and services is low compared to their critical role in driving economic growth.

Consequently, he called for more credit to the real sector, saying, “I   propose that we consider offering more credit to these key sectors and particularly the agriculture sector. It is for this reason that the Recapitalization exercise is a welcome development.

“The recently announced upward review of the Minimum Capital Requirements of Nigeria by the Central Bank of Nigeria would further empower banks to extend more credit to the economy’s productive sectors.”

To address these factors impeding credit to the real sector, Okpara suggested that, “The government needs to improve further the ease of doing business and infrastructural development, such as power, roads, rail networks, etc.

“Setting up industrial centres where these companies can co-habit and share common infrastructure. Harmonize and reduce the various taxes and levies, including locating them in a single hub.

“Banks need to be deliberate in de-risking these companies via Capacity building programmes, and Advisory services.

Specialised Financial Institutions can be created in addition to the Bank of Industry (BOI), especially credit guarantee agencies and risk-sharing institutions, to further facilitate the deepening of credit as practiced in countries such as China which significantly transformed its economy.


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New Report Reveals 20% of Nigerians Use Bitcoin to Transact Daily

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A new report claims that 20 per cent of Nigerians are using Bitcoin to carry out financial transactions every day.

According to the open-source blockchain website, Elastos, the research was compiled from online interviews conducted with 1,407 self-defined ‘tech savvy’ respondents in Brazil, Germany, Nigeria, South Korea, UAE, the UK, and the US.

The interviews were completed by a third party, a registered market research company and completed between 30 March and 04 April ’24.

The report further revealed that 67 per cent of Nigerians would have more trust in Bitcoin to put their life savings than banks and local governments.

The report reads; “The inaugural BIT Index (Bitcoin; Innovation & Trust) – compiled from over 1,400 self-defined ‘tech savvy’ respondents from 7 countries across the globe – sheds light on the actual perception and use of Bitcoin in people’s daily lives, irrespective of its current valuation. Elastos’ BIT Index is part of ongoing research to better track the ‘real world’ use of Bitcoin together with users’ motivations, expectations and barriers around the same.

“In particular, the data reveals the role being played by emerging markets in terms of understanding, usage and confidence around Bitcoin. Nigerian respondents’ levels of usage and trust compare starkly with those expressed from so-called ‘established’ markets such as Germany and the UK and Germany where daily usage levels are just 8% (for German respondents) and (9% for their UK counterparts).

“In terms of the trust – in addition to Nigeria – significant proportions of respondents from Brazil (35 per cent) and the UAE (32 per cent) would have more confidence in Bitcoin-based services to protect their life savings compared to those from markets such as the UK (20 per cent) and Germany (22 per cent).

“When it comes to ensuring the integrity of online transactions, emerging market respondents also revealed their relative confidence in Bitcoin, compared to alternatives. According to the data, 66 per cent of Nigerian respondents and 35 per cent from Brazil have more confidence in Bitcoin-based systems than alternatives such as banks, or national Governments, compared to figures of just 16 per cent (Germany) and 21 per cent (UK) who feel the same.


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