The Vice Chancellor of Covenant University, Professor Abiodun H. Adebayo, has tasked the CBN to ensure an appropriate regulatory framework instead of the recently introduced poor naira re-design policy with its poor implementation so as not to erode the confidence of bank customers in the country.
He made this statement while giving his welcome remarks at the 29th inaugural lecture of the University, delivered by Professor Ochei Ikpefan, of the Department of Banking and Finance, on Friday, 28th of April 2023, where he condemned the CBN’s recently introduced naira re-design policy which he said was a good one but poorly implemented.
According to him, “The emerging scenario in the Nigerian banking sector creates palpable fear and raises questions about our banking industry that guarantees sustainable growth and development. It is disheartening to know most times, that customers of these banks are often affected because of unwholesome practices in the banking industry.”
“Unfair labour practices, unrealistic target setting, out-sourcing of jobs, and opposition to union activities. On the other hand, they commonly exhibit unethical practices to customers, unauthorized tampering with their accounts, charges excessively on transactions, and in interest on loans,” he said
He however noted, “The Nigerian banks have developed innovative products to meet their needs in good and bad times. Any failure to meet customers service requirements and public expectations can spike massive cash withdrawals, and may lead to bank failure irrespective of its solvency.”
“The consequence on the economy can be so far reaching. It is therefore the responsibility of the apex bank as a regulatory body to ensure banks’ protection and reliability,” the VC noted.
While delivering his lecture, the Inaugural Lecturer, Professor Ikpefan, who is a Professor of Banking and Finance, from the Department of Banking and Finance of the institution, explained that there was a need for another review of banks minimum paid up capital of N25 billion to avert the danger of pre 2005/6 financial crisis.
Speaking on the topic, ‘Securing the Financial Health of Nigerian Bank Today for the Future,’ the lecturer, Ikpefan, as part of his recommendations posited that recapitalization would significantly enhance the financial health performance of deposit money banks in the country.
Professor Ikpefan said, “Nigerian banks have gone through turbulent periods before and after the introduction of Prudential guidelines of 1990, as amended in 2010; but sharp practices, insider trading, waste, round tripping, etc., have continued unabated.”
“Reforms remain a major tool for banking soundness, especially in the light of the global financial meltdown. Therefore, there is need for another review of banks minimum paid up capital of N25 billion to avert the danger of pre 2005/6 era where all the banks in Nigeria put together were not up to one bank in South Africa, Malaysia etc. This is evident from the exchange rate of the dollar/naira,” he said.
He argued, “In the light of the recent free fall in the exchange rate of naira to dollar, the evidence from one of my studies shows that recapitalization will significantly enhance the financial health performance of deposit money banks but may not impact on their profitability except with good management.”
“Therefore, with the current slide in the exchange rate, Nigerian banks cannot lend to the real sectors without eroding their capital base,” he noted.
Others at the event were the Deputy Vice-Chancellor, Professor Olujide Adekeye; the Acting Registrar, Mrs. Regina Tobi-David and other members of the University Management.