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N25bn capitalisation: Only 20 banks may survive
TONY AILEMEN,
Yola
ONLY 20 out
of the 89 existing commercial banks may survive at the end of on-going reforms
of the banking system. This is according to the Chairman House of
Representatives, Committee on Banking, Alhaji Modibbo Abdulkadir.
For the 69 banks that fail to scale the
high hurdles, Alhaji Abdulkadir offered only cold comfort. Some have to join the
bank’s 16 community banks to remain in the financial system.
Fielding questions from newsmen in Yola,
Adamawa State, Friday, the lawmaker said the National Assembly would also work
closely with the Central Bank of Nigeria (CBN) to stop alleged prostitution in
the banking sector through the dubious use of ladies as marketing officers.
In line with on-going reforms and
discussion on legal amendments, he disclosed that all managing directors/CEO of
the 89 banks had been invited to Abuja to meet with House of Representatives
members on the planned reforms.
He also repeated allegations of improper
dealings by banks saying that many banks were not doing anything associated with
normal banking. The CBN has already decreed that banks which fail to raise the
minimum capital base to N25 billion by December 2005, would be barred from key
financial transactions.
"You see Nigeria with an annual Gross
Domestic Product (GDP) of about 65 billion dollars is presently experiencing
over banking, moreover less than 50 per cent of this amount go through the
formal sector " Alhaji Abdulkadir said.
He stated that banks which may fail to
merge will join the community banks if they want to remain in business.
Alhaji Ahmed who is leading other
committee members on a fact finding mission to some Northern states had made a
brief stopover in Yola.
He disclosed that the banks that may not
be able to meet the new requirement will constitute another group of banks
providing services close to those of community banks.
He said that only very few commercial
banks are actually doing the work of banking saying that his committee will not
apply sentiments in the banking sanitisation programme.
He said that the House will soon introduce
legislation that will check the use of ladies to attract deposits to banks
noting that the practice may have encouraged the introduction of prostitution
into the system.
"You see, each and everyone wants to own a
bank, nobody want to let go the grip and power. Some of these bankers don’t want
to lose their position, but the nation’s interest must come first" he stated.
He recalled that CBN had already
identified 25 banks which are not doing the actual business of banking and
called on the CBN to publish the names of such banks in the interest of the
nation’s economy.
Some banks have encouraged indirect
prostitution and I pray they stop. If they don’t, we will sanction them. These
things happen because of pressure being put on the staff to get customers, he
said.
He noted that due to the current urge by
banks to remain in business at all cost they engage in declaration of false
profits and tax evasion.
He said that most of the banks now survive
on granting loans to governments at high interest rates which makes it difficult
for small and medium scale businesses to secure loans due to the high interest
rates.
"There is no need managing what cannot be
managed, you cannot force a dead man to stand" he added.
On the fear that people may lose their
jobs, he observed that this is a short term fear.
"We have been given figures relative to
job creation by other possibilities such that when those that remains are able
to do real banking, become strong and big, they will be able to assist the real
sector of the economy and job opportunities will be created," he said.
He noted that the nation is currently
losing a lot of industrial capacity which has led to job losses noting that even
if we continue at our present level more jobs will go even in the banking sector
very soon.
He appealed to the Federal Government to
secure new machines for the Mint to encourage the printing of the naira locally
and other security documents.
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