Despite average Non-Performing Loans (NPLs) in the Nigerian banking industry at six per cent, the Nigeria Deposit Insurance Corporation (NDIC) has said that the banking industry remains strong and well-capitalized.
Although, the Corporation noted that the average NPLs is slightly above the regulatory benchmark of five per cent while average capital adequacy ratio (CAR) stood at 15 per cent.
This is even as kit said that it has reviewed its Financial and Technical Assistance framework and would be providing loans and assistance to specific banks that are in liquidity need due to the effects of the Covid-19 pandemic on the Nigerian economy.
Speaking at a workshop organised by the Corporation for financial journalists, Director, Insurance surveillance department, Galadima Gana stressed that the banking industry is still strong and well capitalised
Gana explained that the industry-wide average liquidity stood at 36 per cent as at September 30, 2020, indicating that banks in the country are liquid, adding that, loan to deposit ratio stood at 60 per cent as against 65 per cent stipulated by the CBN. To this end, he said, there is a need for banks to increase their lending to customers.
“The condition of the industry is generally satisfactory. However, the impact of the pandemic had also led to a decline in credit facilities despite the increase in deposits during the period March to June 2020. The regulatory and supervisory authorities have introduced measures to tackle the impact of the pandemic on the banking system with incentives such as interest rate reduction, moratorium, liquidity injection and regulatory forbearance on loan restructuring among others.
“Closer monitoring of banks and increased campaign on the safety of banks’ deposits through sustained public awareness and building of trust and confidence in the financial remain the key priorities of Regulators/ Supervisors”, Gana stated
In his welcome address, the managing director and chief executive of the NDIC, Alhaji Ibrahim Umaru, said regulators in the Nigerian financial sector are considering using financial technology solutions for business processes such as Risk-Based Supervision (RBS), Monitoring Compliance, Premium Administration, Early Warning Signals, Stress Testing, Analysis of insured institutions’ performance.
Umaru, who noted that the NDIC and the Central Bank of Nigeria (CBN), as well as the Nigeria Communication Commission (NCC), has produced a policy guideline for the registration, licensing and supervision of Fintech in the country, said the sector can help revolutionise the financial industry and achieve the financial inclusion goal.
“The emergence of fintech has its own solitary effect to the extent that it provides wide-ranging channels of financial intermediation through the enhanced used of technology, as you know very well you do not have to own a bank account and you do not have to go to any bank to transact any business using your mobile phones and other devices.
“There are two main concerns for the corporation on Fintech: these are how to identify and insure non-bank deposit-taking institutions licenced by CBN and other Agencies e.g. SEC. Currently, there is an ongoing engagement with the relevant regulatory agencies on how to actualize that within the limits of the legal provision”, the NDIC MD added.