The Central Bank of Nigeria (CBN) has said it does not want Nigerian banks to be money changers but major players in growing the economy.
CBN Governor Godwin Emefiele warned that the days of arm chair banking were over.
He also said the era of non-performing loans (NPLs) was now history in Nigeria “as anyone who benefits from any facility must pay back”.
Speaking on Tuesday in Abuja at the12th annual Banking and Finance Conference 2019, Emefiele who was represented by the Deputy Governor, Economic Policy, Dr. Joseph Nnanna said, “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, he added, “Becomes meaningful when you take liquidity excesses from your surplus centres and channel them into scarce areas. That way, you are transforming liquidity into assets and you are growing the economy and creating employment.”
He said the era when banks deployed their assets in fixed income instruments, particularly treasury bills and bonds – at the expense of the real sector, was over.
The CBN Governor urged the banking sector to live up to its core responsibility of stimulating the economy by advancing credit to the real sector to create jobs for the people.
He noted that the days of brick and mortar banking were gone, urging them to embrace digital banking
Emefiele said unemployment remained the biggest challenge in the country and appealed to the banking industry to assist government tackle the challenge.
“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.
“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,” he said.
Emefiele said employment is the most serious issue facing the country and this is where banks have to play a crucial role by supporting government in asset creation, adding, “we must support the government in creating jobs for the teeming population”.
He urged the banks to redirect their idle liquidity and transform them into asset creation tools.
“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,” Emefiele said.
Going forward, he said, “We shall learn to borrow in the old fashioned way; by paying back when we have accessed facility from the banks. 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.”