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 Daily
Independent Online.
* Monday, July 05, 2004.
Bankers
blame govt for high inflation rate
• CBN
puts bank fraud at N2.5bn in 2003
By
Sanya Adejokun,
Senior Correspondent, Abuja
Government
officials have been blamed by the Chartered Institute of Bankers of
Nigeria (CIBN) for the unending high inflation rate, now at 19 per cent.
The
penchant by government agencies to demand high interest rates on deposits
is responsible for the high cost of loanable funds, according to CIBN
sub-committee on monetary and fiscal policies, which made the disclosure
in its report on developments in the financial system to the Bankers’
Committee.
This
will form part of the issues that the committee will discuss on Tuesday
when it meets in Abuja .
“The
present inflation rate of 19 per cent has caused the demand for higher
rates from owners of funds, making deposit rates to continue to be on a
rising trend” the sub-committee said, expressing dissatisfaction that “in
spite of the new trends, banks are restricted to the four per cent above
Minimum Rediscount Rates (MRR) ceiling” which “does not cover overhead
expenses”.
Other
problems highlighted include continued high interest rate demand by
government agencies from banks; rising inflation trend, which makes it
necessary for depositors to ask for high interest rates; increasing high
cost of doing business and occasional threats by the Central Bank of
Nigeria (CBN) to withdraw public sector deposits in banks, which tends to
induce pressure on interest rates.
It
criticised the government for failing to meet its obligation under the
tripartite agreement, which put the ceiling on interest rates at 25 per
cent. The government’s
inability to meet its obligations under the agreement with the CBN and
the banks has dislocated the envisaged gains from the agreement.
“The
fundamentals upon which the agreement was reached had changed and there
was a need for all parties in the agreement to revisit it soonest, if
progress must be made”, the sub-committed insisted.
The
sub-committee called on the CBN “to put in proper perspective the issues
of withdrawal of public sector funds from banks so that it would not
constitute a shock to the system” while commending it for effectively
managing the foreign exchange and foreign reserve, developments which
have led to gradual appreciation of the naira.
Also,
the increase in the volume and value of items processed through the
automated clearing infrastructure in the last two months will be
discussed at the meeting in Abuja for the first time.
The
report showed that three banks joined the clearing house between April
and May, raising the number of participants to 75.
In
all, 1,044,967 clearing items valued at N895 billion were processed in
the two months, a daily average of 25,000 items worth N22 billion.
Meanwhile,
the CBN has revealed that banks lost over N2.5 billion in 369 cases of
fraud last year.
Its
Annual Reports and Statements of Account for 2003 showed that 1036 cases
of fraud and forgery, involving N3.6 billion, $3.5 million, DM120 million
and Euro 859 million, were reported.
"Out
of this number of incidents, 369 cases of fraud were successfully
perpetrated and resulted in loses to banks amounting to N1.5 billion,
US271,882 and Euro 895.0".
CBN
also reported that the Small and Medium Industries Equity Investment
Scheme (SMIEIS) recorded improvement in operations over the previous year
as N7.1 billion was invested by banks, compared with N6.87 billion in
2002, an increase of 2.5 per cent.
"As
at end December 2003, a total of N19.7 billion had been set aside by
banks, of which N7.1 billion had been invested in 137 projects.
Similarly, 85 investments valued at N4.66 billion, representing increases
of 163 percent and 194 percent respectively over the figures in 2002 were
made during the year", the report added.
In
the sectoral distribution, 95 investments valued at N4.89 billion (64.6
per cent) went to the real sector, 42 investments (35.4 per cent) went to
the services sector.
Sixty
investments in the manufacturing sub-sector (including prints and
publishing) accounted for 43.8 per cent of the total, services (18.3 per
cent) and agro-allied (17.5 per cent).
By the
end of 2003, unutilised funds in the scheme stood at N12.66 billion,
compared with N5.9 billion in the preceding year. Funds set aside and
overdue for utilisation amounted to N2.2 billion.
To
encourage more viable investment of the SMIEIS funds, the Bankers
Committee approved a micro-credit window for micro-enterpreneurs.
"Under
this arrangement, 10 per cent of funds set aside by the participating
banks under the SMIEIS would be earmarked for micro-credit investment
which would be disbursed through micro-finance institutions and other
participating institutions to be approved for that purpose".
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