Banks
in the country have abandoned their core function of financial
intermediation and instead, are more concerned with pursuing deposits.
Experts
who spoke on the issue believe that the refusal of banks to take the
risk in financing some sectors of the economy have put the economy in
the poor position it is today.
Boniface Chizea, managing director of BIC Consulting, a financial consulting firm, said banks are now into rent collection.
“Essentially
today, banks have forgotten about financial intermediation, which
should be at the crux of their services. Today, all banks are
concentrating on debt collection. We are faced with a situation where
we have almost criminalised credit. The banks should add value,” Mr.
Chizea said.
He
said despite the reforms carried out in the banking industry over the
years, the sector has still not been able to lift the real sector due
to the difficulty small businesses and manufacturers experience when
they need loans.
No linkage
Bismarck
Rewane, chief executive officer of Financial Derivatives Company
Limited, a financial and investment consultancy firm, believes that the
absence of linkage between various sectors of the economy is also
reflected in the inability of the banking sector to add value to the
real sector.
“The
weak linkage between the banking industry and the real sector is the
issue. The decoupling of growth in GDP (gross domestic product) and
money supply from credit intermediation means that even if the banking
sector were to shut down today, it may not have significant effect on
GDP growth. About 40 per cent of Nigerians are financially excluded,”
Mr. Rewane said.
According
to him, while credit to the real sector declined between 2008 and 2010,
real GDP growth was on the increase. He said an improvement in the
payment and settlement system in the financial sector would go a long
way in encouraging more Nigerians to patronise the banks.
He
expressed concern that the poor savings culture among Nigerians was
making it difficult for banks to mobilise deposits, adding that the
poor infrastructure base was making it difficult for businesses to
thrive.
Oladimeji
Alo, managing director of Excel Professional Services Limited, a
financial and human resource consultancy firm, said the disconnection
of the banks from the bankable citizens has discouraged many Nigerians
from patronising banks.
“When
we had negative interest rate, I thought it was going to be a temporary
thing. Banks’ rate are lower than interest rate and nobody is doing
anything about it.
“Many people are keeping their money under their pillows today. You get SMS alert on transaction, they debit you.
“I
think COT (commission on turnover) should be scrapped. That will
motivate banks to seek other ways to make money and take investment
risks,” Mr. Alo said.
He added that the banks are too laid back to think of ways of intermediating in the real sector and generating income.
