Nigerian banks charge highest interest rate in the world, says Segun Ajibola, President/ Chairman of Council, Chartered Institute of Bankers of Nigeria (CIBN).
Ajibola, who spoke at the third inaugural lecture of Caleb University, Imota, Ikorodu, Lagos State, said banks are only interested in quick wins, thereby supporting trade and commerce without due concern for the growth of the real sectors of the economy.
“The failure of banks to lend to agriculture, small and medium scale enterprises and micro businesses accounts for the weak performance of the economy over the years. Bankers demonstrate ostentatious lifestyles, largely at variance with the dictate of the time,” he said.
He regretted that fraud and other malpractices are on the rise through collusion, insider’s abuse, staff convenience depicting total loss of integrity among practitioners.
Speaking on the theme: ‘Rhythms and Riddles of Bank Credit: Synergies and Dislocations in Nigeria’s Economic Growth’, Ajibola highlighted the criticisms that trail banking, banks and bankers in Nigeria and other economies that share common features with the country which should not come as a surprise.
He advised banks to redefine their lending behaviour to favour longer tenor loans. “Indeed, tenured loans are more impactful for the real sectors of agriculture and manufacturing in the country. Accordingly, banks should restructure their operations and business templates to directly source longer-term funds in the form of equity, debentures, bonds, tenured deposits to enable them to lend for a longer duration. The current situation wherein bank deposit portfolio is skewed towards short-term deposits constrains their ability to lend to most sectors of the economy for the desired tenor,” he said.
Continuing, he said banks should remain ethical and professional in the conduct of their lending business. “They should continue to engage staffers on right skills and competencies in lending, devout more attention to capacity building in the relevant areas and adhere strictly to the rules of the game as contained in the relevant regulatory policies, guidelines and programmes,” he added.
He enjoined the government, bank regulators, deposit money banks and other financial institutions that are purveyors of credit to tighten the rules that govern lending for general commerce, especially imports, to block leakages that usually arise from over-invoicing and other acts of economic sabotage.
He said financial intermediation occupies the center stage in the business of banking and finance. “When properly carried out, it assures the realisation of the often-mentioned Keynesian multiplier effects in the economy,” he said.
