...CBN Begins Withdrawal of Public Funds
To transfer N4bn from NITEL's account
From Kunle Aderinokun in Abuja
Two days after the Federal Government announced a new capital base of N25 billion for banks, the Central Bank of Nigeria (CBN) yesterday began phased withdrawal of government funds from banks for onward deposit in its vaults.
Already, the CBN has written to the heads and chief executives of government parastatals and agencies intimating them it would withdraw a certain percentage from their deposits in banks.
This move, it was learnt, is in line with the CBN's move to consolidate and strengthen the banking industry.
THISDAY checks revealed that the CBN has for instance, given intention to transfer about N4 billion from the bank accounts of the Nigeria Telecommunication (NITEL) Limited.
The directive, according to a Presidency source, who spoke to THISDAY, was handed to the chief executives of parastatals Wednesday by the CBN Governor, Professor Charles Soludo, at a closed door meeting, after he had confirmed deposit positions at the various banks operated by the parastatals.
The high-level meeting was attended by all the heads and chief executives of parastatals and agencies including those of Bureau of Public Enterprises (BPE), Nigeria Communications Commission (NCC), Nigeria National Petroleum Corporation (NNPC), Nigeria Ports Authority (NPA), National Maritime Authority (NMA), Education Tax Fund (ETF), and Petroleum Development Trust Fund (PDTF).
Soludo had on Tuesday told Chairmen and Managing Directors/Chief Executive Officers of the nation's 89 banks that the CBN would embark on phased withdrawal of public sector funds from banks starting this month.
The source said the CBN took the decision to discourage having government's funds stay idle in banks, a situation which had allowed banks to enjoy cheap benefits from them.
"He doesn't want idle funds in the hands of government and banks. If any of these parastatals need more money , it would have to apply to the CBN to get the funds," the source noted.
"The action of the CBN," according to the source, would "almost run all the concerned banks into trouble especially those that are not strong because they depend on public funds so much."
"The essence of doing this is to create sanity in the banks. They will not get idle funds any more because the era of idle funds is over. This is to prepare them for consolidation through mergers and acquisitions. The small banks that cannot cope would have to merge.
"All these aggressive marketing by banks would be directed to the manufacturing and the real sector which would improve the economy," the source added.
The source explained that the latest move by the CBN is an indication that the country is "moving from the era of money trading to proper banking."
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