*It would encourage money laundering, he says
LAGOS — SENATE President, Chief Adolphus Wabara, yesterday faulted the N25 billion minimum capital base introduced by the Central Bank of Nigeria (CBN), saying it would worsen the problem of money laundering in the country. The Federal Government said also yesterday that the on-going reforms in the banking sector were aimed at driving interest down to a single digit.
Meanwhile, the Chartered Institute of Bankers has said the banking industry is studying carefully the proposed N25 billion capital base and would soon come out with its official position on the matter.
Senator Wabara, who spoke with newsmen at the Presidential Wing of the Murtala Mohammed Airport, Ikeja, Lagos said the CBN governor ought to be addressing the issue of high interest rates rather than introducing N25 billion capital base for banks in the country. According to him, the issue would open more doors for criminals to use the banks for money laundering purposes.
Speaking further on the issue, Senator Wabara said: “We will be encouraging money laundering because all these 419 guys will probably own heavy shares in the banks, so that they can find an avenue to launder their money. I won’t say anything now until I receive the report from the Senate Committee on LAGOS — SENATE President, Chief Adolphus Wabara, yesterday faulted the N25 billion minimum capital base introduced by the Central Bank of Nigeria (CBN), saying it would worsen the problem of money laundering in the country. The Federal Government said also yesterday that the on-going reforms in the banking sector were aimed at driving interest down to a single digit.
Meanwhile, the Chartered Institute of Bankers has said the banking industry is studying carefully the proposed N25 billion capital base and would soon come out with its official position on the matter.
Senator Wabara, who spoke with newsmen at the Presidential Wing of the Murtala Mohammed Airport, Ikeja, Lagos said the CBN governor ought to be addressing the issue of high interest rates rather than introducing N25 billion capital base for banks in the country. According to him, the issue would open more doors for criminals to use the banks for money laundering purposes.
Speaking further on the issue, Senator Wabara said: “We will be encouraging money laundering because all these 419 guys will probably own heavy shares in the banks, so that they can find an avenue to launder their money. I won’t say anything now until I receive the report from the Senate Committee on Banking, Insurance and other Financial Institutions which met with the CBN governor. If you ask my opinion, I will say it is very high-handed.”
He said between N5 billion and N6 billion would have been a more realistic equity base for the banks, stressing that even in the USA, not more than $3 million was required to float a bank. Senator Wabara said against this background, he was finding it difficult to understand why the CBN governor would want to slam a N25 billion capital base on Nigeria banks. “The CBN governor should be addressing the issue of high interest rates instead of raising capital base to N25 billion.”
The Senate, he added, had invited the CBN governor to appear before it and explain why the new condition was introduced. Wabara said the Senate was also considering a review of the CBN Act soon, but only after the Senate Committee on Banking had submitted its report.
However, Senior Special Assistant to President Olusegun Obasanjo, Prof. Jerry Gana, speaking in defence of the policy at the international fair tagged: “InvestNigeria” in Abuja said: “The SME sector, for the administration, was a very vital sector because we realised that it was the sector, more than any other, that would help us to achieve the objectives of NEEDS.
“Government is determined to give you (SME operators) every support in your operation and see that you do not only develop but expand. That is why we have directed the Bank of Industry to give loans to the productive sector at affordable interest rates.
“That is why we are also struggling so that the interest rates would come down. Currently, it is not possible to take loans even for big companies at 20, 25 or 30 per cent. We are determined to bring down rates to a single digit, 6 , 7, 0r 9 (per cent), but certainly not 10 or more than 10 per cent, he said.”
Prof. Gana, who is also the Chairman of the International Multisectoral Economic Development Organisation (IMEDO), promoters of the fair, said SMEs held the three key objectives of wealth creation, poverty reduction and employment.
