CBN explains rationale behind establishment of credit bureaux Stories
Central Bank of Nigeria (CBN) has given detailed explanation why Credit Bureaux were established, saying that they are expected to play vital roles in assisting the regulator in the effective management of credit risk within the banking system whilst facilitating access to finance in the economy.
Deputy Director of the CBN, Steven Nwadiuko, disclosed this in Lagos yesterday at the awareness and education programme for credit reporting, adding that,“Credit Bureaux were established by the apex bank also to provide relevant information (especially on the borrowing history and behavior of a loan applicant) that will enable lending institutions make good lending decisions.”
He explained that Credit Bureaux were often encouraged to place reliance on “reputational” collateral rather than “physical” collateral and thereby drive responsible credit expansion.
He, however, added that the newly enacted Central Bank of Nigeria Act, Cap 7 of 2007, made provision for the establishment of credit bureaux and that the CBN released the guidelines for the licensing, operations and regulations of credit bureaux in Nigeria in 2008.
He said the three privately owned credit bureaux – XDS Credit Bureau, CR Services Credit Bureau and CRC Credit Bureau were subsequently licensed by the apex bank.
Nwadiuko said the CBN has been saddled with the responsibility of ensuring the stability of the financial system and has been formulating policies aimed at achieving a sound and stable financial system.
“In doing that, the bank found it pertinent to pursue policies that targeted the stability of the financial system which is regularly threatened by unpleasant banking practices and the accretion of toxic assets. It was our commitment to establishing a sound and strong financial system that led us to vigorously pursue the development of the key financial infrastructures like the payments system, credit reporting systems and collateral registry,” he said.
He explained that a credit reporting system comprised of the legal, regulatory and institutional arrangements put in place to deal with the information asymmetry inherent in credit and related financial transactions.
Also, credit reporting has been acknowledged as the fastest and most successful way to facilitate the necessary growth in accessing credit finance and where it is working smoothly, the system unlocks the power of credit for enterprise development and individual prosperity.
“It also acts as a social accountability mechanism that promotes responsible behavior in the credit /financial markets. It has long been established that a weak credit reporting regime constrains lending and is a threat to the overall stability of the financial system. Credit Reporting in Nigeria has its antecedents in the financial crisis of the late 1980’s and early 1990swhen large quantum of non-performing credits bedeviled the banking industry,” he said.
According to the CBN director, that era witnessed persistently rising incidence of abandoned facilities in Nigerian banks with attendant losses and erosion of banks’ capital.
He noted that to arrest the situation, the apex bank in January 1998 established the Credit Risk Management System (CRMS), a public credit registry operated by the CBN that Banks were to report to and check-up all credits above N1 million.
Consequently, the CBN is committed to providing the required regulatory support to enable the credit reporting industry to thrive in Nigeria.
“In the same vein, we have made it mandatory for all financial institutions to have data exchange agreements with at least two credit bureaux. All banks are required to obtain credit report from at least two (2) credit bureaus before granting any facility to their customers whilst quarterly portfolio checks must also be carried out to enable them determine borrowers’ current exposure to the financial system. We also review compliance levels and in line with our zero tolerance policy for infraction, sanction erring institutions,” he said.
Continuing, he said the credit reporting industry in Nigeria has performed creditably well.
“Notwithstanding the numerous challenges facing this sub-sector, we have witnessed a significant improvement in the utilization of credit bureaus’ products which invariably has impacted on their turnover. The credit bureau operators have continued to record steady increase in the number of records of registered borrowers. From a mere 78,189 in December 2010, the total number grew to 18,640,000 in June 2012,” he said.
Skye Bank partner WorldRemit on cash pickup service
WorldRemit, the global money transfer app, has partnered with Skye Bank Plc to offer instant money transfers to Nigerians.
WorldRemit, the global money transfer app, has partnered with Skye Bank Plc to offer instant money transfers to Nigerians.
In addition to its same-day bank transfer service, the financial technology company now allows people to send money to more than 140 cash pick up locations in the country instantly.
In a statement, the firm said people in more than 50 countries could use the app to send money to Nigeria and recipients could collect money instantly from 140 branches of Skye Bank.
It said WorldRemit customers currently send over 400,000 transactions monthly. The technology firm said Nigerians in Diaspora sent home $20.8 billion in 2015, by far the largest volume of remittances to any country in Africa and the 6th largest in the world, according to the World Bank.
WorldRemit’s Chief Executive Officer& Founder, Ismail Ahmed, said: “Gone are the days of queuing in line at a high-street transfer shop and waiting several days for a money transfer to arrive. At WorldRemit, we offer people a choice of the most convenient ways to send and receive money. Today, Nigerians can use our app or website to send money to a bank account or cash pickup location, instantly.”
In February 2015, the firm received a $100 million funding round led by Technology Crossover Ventures, early investors of Facebook, Spotify, and Dropbox.
In June 2015, the technology firm also was recognised by United Nations agency the International Fund for Agricultural Development (IFAD) for shaking up the global money transfer industry.
WorldRemit offers a convenient mobile service and low minimum fees, allowing people to send smaller amounts, more frequently. It said fees for transfers to Nigeria start at 0.95 Euro and 0.99 GBP respectively.
AfDB highlights priorities areas for Africa’s transformation
African Development Bank (AfDB) has said it would focus on five priority areas to advance Africa’s transformative agenda over the next 10 years.
AfDB President, Akinwumi Adesina, said these areas are to light up and power Africa, Feed Africa, Integrate Africa, Industrialize Africa, and improve the quality of life for the people of Africa.
These five areas, which are in line with the Bank’s Ten Year Strategy, have been termed the “High-Fives,” serving as a blueprint for African countries to embark on a course of sustainable transformation.
Against the backdrop of this 10-year transformative agenda, the bank’s statistics department has developed several innovative tools, as part of its Africa Information Highway (AIH) initiative, which will enable the Bank to monitor and disseminate information/data on the performance of African countries in the High Fives priority areas.
One such tool is the High-Fives application, which can be accessed on the Bank’s AIH Open Data Platform. The application is specifically focused on tracking progress of individual African countries in these five priority areas, thereby creating opportunities for any necessary and timely corrective action.
Through the High-Fives application, users can access a wide range of priority-area development data compiled from multiple international and national official sources. They will also be able to perform visual data comparison across time and countries.
“What makes the application unique is its ability to provide the Bank with the facility to easily track comparative progress for different indicators coming under the High-Fives at national and sub-regional levels from their mobile devices,” said Charles Lufumpa, Director of the Bank’s Statistics Department.
