CPPE urges CBN to prioritize depositors’ funds safety The Centre for the Promotion of Private Enterprise (CPPE) is calling on the Central Bank of Nigeria (CBN) to safeguard depositors’ funds, emphasizing that the proposed bank recapitalization requirements won’t see a significant increase when adjusted for inflation.
Muda Yusuf, the CEO of CPPE, made this plea in a statement on April 1, citing the need for the CBN to assure depositors regarding their funds’ safety within the banking system, regardless of the current capitalization levels of banks. Yusuf stressed the importance of maintaining public confidence in the Nigerian banking system’s stability and soundness, especially concerning the perceived risks associated with smaller banks.
He urged the CBN to mitigate risks for shareholders and employees in the banking sector and to avoid concentration risks and the strengthening of an oligopolistic structure in the banking industry. Yusuf highlighted that inflation has significantly reduced the value of banks’ minimum capital, necessitating the recapitalization effort.
He referenced the current minimum capital requirements for banks with different licenses and the recent adjustments made by the CBN to increase these thresholds. Yusuf underscored the impact of inflation on the value of capital, emphasizing the need for recapitalization to ensure depositors’ funds’ safety, enhance financial system stability, bolster banking sector resilience, and position banks to support economic growth.
He commended the CBN for providing a 24-month compliance timeline to minimize disruptions, potential bank collapses, or hurried mergers and acquisitions. Yusuf also raised concerns about the substantial interest rate spreads in the Nigerian banking sector and the limited credit access for small businesses, urging a focus on de-risking the credit space to promote economic growth and inclusion. Furthermore, he emphasized the importance of addressing predatory and anti-competitive practices in the banking industry, particularly in light of the recapitalization policy.
