CBN may limit across-counter bank withdrawals to N10,000

Nigerians are in for hard time as the country’s apex bank, Central Bank of Nigeria (CBN) has been told to limit across-the-counter withdrawals to N10,000, following a major drop in customers’ deposit.

The call, made by Bankers Committee was due to with the industry recording a decline of about N1.03tn in total deposit.

According to a report by Punch, between April 2015
and April 2016, the total deposits of bank customers with the Deposit Money Banks dropped by 5.6 per cent or N1.03tn from N18.54tn to N17.51tn.

The banking sector also recorded a decline of N154bn in total assets within the one year period, from N27.58tn in April 2015 to N27.43tn as of April 2016.

The industry’s gross credit to the private and public sector dipped by N41bn or 0.3 per cent from the April 2015 value of N13.4tn to N13.36tn in April 2016.

The CBN in the document quoted in the report explained that the industry was operating above the minimum requirement of 30 per cent.

It said as of April 2016, the banking sector’s liquidity ratio stood at 46.3 per cent as against 39.79 per cent as of April 2015.

It said the sector also recorded a decline in earnings within the period as unaudited profit before tax for the industry decreased by 10.8 per cent (N24bn) from N222bn in April 2015 to N198bn at the end of April this year.

CBN further explained that the banking sector was still faced with a lot of pressure points, some of which it listed as resurgence of inflationary pressures in the face of negative output growth; continuing low oil prices; and lack of fiscal buffers.

Others are capital flow reversals; rising pressure on exchange rate in the face of declining external reserves; huge growth in credit to the government to compensate for declining oil receipts.

According to the document, the bank is faced with policy challenges in the areas of stimulating output growth even with high rates of lending and inflation; and ensuring flow of credit to the real sector of the economy with liquidity trap in the banking sector.

The huge decline in banks’ deposits, according to sources in the banking sector, has forced most of the banks to increase the targets given to bank workers, in a bid to improve their liquidity position.

But a top bank official quoted in the report said the sad development was due to the withdrawal of government funds through the implementation of the TSA.

“The competition for deposit mobilisation is very high now in the banking sector because since the government withdrew its funds through the TSA last year, a lot of banks were seriously affected.

“So, it has been challenging now for bank workers to mobilise deposits from customers as we used to do because of the economic situation.

“A lot of people are struggling to survive and even many of those that we meet when we go out to canvass for deposits will tell you that they are in need of money.”

[Punch]

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