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The Chairman, Abia State Board of Internal Revenue, Prof. Udochukwu Ogbonna, has called on the Central Bank of Nigeria, CBN, to reduce the cash reserve ratio to enable deposit money banks extend loans to their customers so as to enhance the performance of banks and at the same time, stimulate the Nigerian economy.
Prof. Ogbonna who made the appeal on Saturday, in Umuahia during the Chartered Institute of Bankers Nigeria, Abia State Chapter Award Night, while accessing the Response of Deposit Money Banks to Monetary Policy Dynamics in Nigeria, emphasized that cash reserve ratio negatively and significantly affect the performance of Deposit Money Banks in Nigeria.
He said during a study, it was discovered that own shock from bank performance exerts greater fluctuations in the banking business in Nigeria just as he revealed that apart from banks’ shock; banks respond negatively to shocks from major monetary policy instruments.
Speaking further, Prof. Ogbonna said it was observed that Monetary Policy Rate causes bank performance (ROA) in both the short and long runs, while Cash Reserve Ratio, Liquidity Ratio, and Savings Deposit Rate do not cause ROA in the short run but in the long run.
The financial expert said it was also established that monetary policy instruments jointly cause bank performance in the short and long run as opposed to individual instruments in Nigeria.
Prof. Ogbonna, who acknowledged that bank constitutes the engine of growth and development in every economy, added that deposit money banks in Nigeria are starved of funds due to the high reserve ratio as always stipulated by the Central Bank of Nigeria (CBN).
He revealed that a study of different country’s CRRs, indicates that Nigeria maintains the highest at 45%, presently, stating that since banks’ shock constitutes greater fluctuations in the banking industry, it is advised that banks outside the monetary policy measures should carry out adequate credit analysis and appraisal before extension of credit to customers in Nigeria.
Fielding questions from newsmen, a former Director, Corporate Communications, Central Bank of Nigeria, Mazi Isaac Okoroafor, said the CBN is playing huge role in bridging the vacuum created by the failure of other critical sectors that should assist Nigerian economy.
He opined that if not for the CBN, Nigeria won’t have an economy, adding that it has done a whole lot in ensuring that the foreign exchange market remains afloat despite the inadequacies of the real sector.
Mazi Okoroafor maintained that the CBN, cannot be blamed for the country’s woes, emphasizing that Nigeria is not producing anything which is why the naira has continued to be weak, informing that the strength of a currency is dependent on the ability of the economy to produce and export.
He said as is the case in Nigeria, where the country is not producing or exporting, the currency can never be strong in this kind of circumstance, reiterating that CBN deserves some commendations for carrying the burdens created by the real sector.
Responding to allegations that the CBN was keeping mute while workers in commercial banks allegedly give Point of Sell (POS) to individuals to run for them, which has also worsened the cash burden, Mazi Okoroafor, said CBN cannot be everywhere, stressing that key infrastructures or technologies that should assist the CBN is lacking while urging government to fix critical sectors like health, power sector among others for the job of CBN to be less burdensome.
He also lauded the Chartered Institute of Bankers Nigeria, Abia State Chapter for finding him worthy with an award of Professional Excellence, Corporate Communications.
Earlier in his address, the Planning Committee Chairman, Chartered Institute of Bankers Nigeria, Award Night, Mr Adiele Kelechi, noted that bankers have been at the forefront of these economic battles , saying they must raise their heads high for standing up to the occasion even as the country and Abia has started witnessing stability caused by these policies just as he reeled out other challenges which they have surmounted.
Also speaking, The outgoing Chairman of the Chartered Institute of Bankers of Nigeria, Princess Chinyere Ogalabu, said she is happy to have steered the ship of the Association these years, adding that she is proud of what the Association achieved under her watch as Chairman.
She acknowledged the enormous task encountered in steering the ship, while praying that her successor, Mr Ogbuagu Ogbonnaya, will surpass the records she set while in office.
Responding, Mr Ogbuagu Ogbonnaya, promised to sustain the good work and successes achieved by his predicessor, as well as enhance the financial development of the Association to the benefit of members.
Correspondent reports that there were awards of Patron to the current Commissioner for Agriculture in Abia State Dr. Clifford Agbaeze, award of Professional Excellence, Corporate Communications to Mazi Isaac Okoroafor among others while speakers such as the Branch Controller Central Bank of Nigeria, Mr Olaoba Ayotunde Olamidaji, also professed hope for the country’s financial institution and appreciated the organisers of the event.
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