CBN, Banks to Bar Bad Debtors from Purchasing Forex

The Central Bank of Nigeria, CBN, and banks, under the aegis of the Bankers Committee have decided to bar bad debtors from purchasing foreign exchange in the inter bank foreign exchange market.

Committee which comprises of the top management of CBN, Nigeria Deposit Insurance Corporation, NDIC, and chief executives of banks took the decision on Thursday, April 9, 2015.

It was also decided by the committee to reduce limit on naira debit Visa and Mastercard. The limit represents the amount of dollars that card holders can spend or withdraw through the cards when they are out of the country.

Director, Banking Supervision Department, CBN, Tokunbo Martins disclosed this at a press conference at the end of the Bankers Committee meeting held in Lagos.

Chief Executive officer of Union Bank, Emeka Emuwa, Chief Executive of Standard Chartered, Bola Adesola, Chief Executive of Citibank Nigeria,Omar Hafeez, and the CBN Director of Corporate Communications, Ibrahim Muazu, were all present at the press conference.

Speaking on the decision to stop bad debtors from purchasing dollars from interbank market, Martins said, “We realise it is becoming increasingly difficult to get some debtors to pay up on their loans, more so, there were lots of discussion on what can be done to make them pay up on their loans, so it was decided that one thing that we may do is to stop them from getting access to foreign exchange, another thing that we also considered, that should be done in order to proceed forward is to publish the names of borrowers that refuse to pay up their loans on the newspaper.” He said this is all in a bid to ensure continued safety and soundness of the banking industry.

Martins added that “It is not all debtors. It is the bad, the chronic debtor, the company, the directors of the company, the subsidiary, every member of the group, that would be published, in order for the entire group to be subjected to that treatment, especially those ones that are just deliberately refusing to pay. Those are the kind of debtors we are talking about, the industry has a standard, and we don’t want non performing loans to be more than five per cent of the total loans in the industry.

“Currently total loans in the industry is between N13 trillion to N15 trillion. Right now we have not reached that upper limit of five percent but we don’t want to get there and that is why we decided we need to come up with this measure. Currently the non performing loan in the industry is about 3.3 percent, but we don’t want to get to the limit of five percent.

“On whether we can stop the bad debtors from purchasing foreign exchange at the parallel market, there is no way we can do that, but that will come to them at a cost because it is much more expensive. What we are much concerned is the official market which is much cheaper.”

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