Uche Usim, Abuja
Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele on Tuesday reminded players in the banking sector of the need to cling tenaciously on their core responsibility of stimulating the economy by advancing credit to the real sector to help solve the unemployment nightmare.
Arising from that, the CBN Governor warned that the era of armchair banking where banks deployed their assets in fixed income instruments particularly treasury bills and bonds- at the expense of the real sector, was completely over.
He further noted the era of non performing loans (NPLs) which has deeply hurt the banking industry was now a thing of the past as anyone who benefits from any facility must have to pay back- and called on the judiciary for support to avoid growing impotent loans.
Emefiele made the aforesaid assertions at the 12th annual Banking and Finance Conference 2019, themed: “The Future of Nigerian Banking Industry- 360 Degrees”.
According to him, there was an urgent need for the industry to embrace the 21st century banking ideals, by redirecting surplus resources to critical sectors of the economy.
He noted that the days of brick and mortar banking were gone, urging them to embrace digital banking which remains the order of the day.
Represented by CBN Deputy Governor, Economic Policy, Dr. Joseph Nnanna, Emefiele said unemployment remained the biggest challenge in the country and appealed to the industry to assist government in addressing the challenge.
He said: “Talking about transformation, banking in Nigeria has come a very long way. Today, with our new generation banks, the players of this space are digital in nature. We have gone beyond armchair banking where players play safe.
“Today, the CBN is calling on the banking system to be alive to its responsibility. We cannot conceive an economy without banks and neither can we conceive banks without an economy.
“What do I mean by this? What I am simply saying is that the days of armchair banking, playing in the treasury bills space- those days are right behind us. The Central Bank of Nigeria is bullish and we have in fact, taken our responsibility very seriously.”
Emefiele added”In the past months, we have come with new initiatives: the loans to deposit ratio is aimed at transforming liquidity management into risk asset management and asset transformation.
“We do not want the banks to be money changers. Banking is not banking if you only play in the government fixed income space. Banking becomes meaningful when you take liquidity excesses from your surplus centers and channel them into scarce areas, that way you are transforming liquidity into assets and you are growing the economy and creating employment.
“Talking about employment, employment is the most serious issue facing our country and this is where banks must play a critical role.
We must support government in asset creation, we must support the government in creating jobs for the teeming population.
“That is why we implore banks to ensure that idle liquidity is transformed into asset creation. We have also tried to derisk the banking industry. The days of non-performing loans are behind us and we call upon the judiciary to assist us in this regard.
“We shall lend to borrow in the old fashion way, by paying back when we have accessed facility from the banks. So, in the 21st century, can we still be doing banking business as if we were in the 18th and 19th century? The answer is no.
“As Nigerians, the future of our country is in our hands and that future must be defined by the banking industry. Without money, we go nowhere in any economy in the world: with money we can go places”, he explained.