The chairman of the Senate Committee on Banking, Insurance and Other Financial Institutions, Senator Tokunbo Abiru, has urged Nigerians to be patient with the Central Bank of Nigeria(CBN) as its recent policy reforms are geared towards stabilising the volatility in the foreign exchange market.
Abiru also expressed confidence that the Monetary Policy Committee (MPC) meeting slated for February 26 2024, will hold despite the committee not yet being fully constituted. This is as he acknowledged the pivotal role played by NDIC in enhancing stability within the banking sector, particularly, in safeguarding depositors’ funds noting that such measures contribute significantly to bolstering confidence in the overall banking system.
He stated this on the sidelines of a retreat organised by the NDIC for the Committee on Banking, Insurance, and Other Financial Institutions on ‘Deepening Deposit Insurance Knowledge for Effective Legislative Functions’ in Lagos yesterday.
He stated that, ‘to the extent that we know it (MPC meeting) will be held on the 26th clearly, the members will emerge before the 26th so I want you to just believe what the CBN.’ He noted that, the focus of the CBN on curbing inflation would extend to fostering economic growth and alleviating the hardships faced by Nigerians.
To him, “If you also follow what has been happening, particularly from the end of the CBN, we have seen a lot of rafts of circulars that have come into play. I am sure you are mindful of the limit they have brought to the net open position of the bank’.
The fact that they have also done validation of most of the outstanding obligations that people refer to as forward and of course, you can see in the last couple of days, that some gains, some strengthening of the naira, and my sense is that you should give them a bit of time. Also most of the policy decisions that we are beginning to see, we believe hopefully, will help us moderate the depreciating value of the currency.
“But I must also mention that what is most critical that we expect is for them to focus on how they would tame or moderate inflation because once you moderate inflation, I’m sure the order component, the other price indices whether interest rate or exchange rate will moderate along what you do to inflation. So, it is very critical that we focus our attention on the inflation index in the country.”
While acknowledging the NDIC’s positive impact, he also urged the corporation to prioritise the prompt payment of depositors’ funds in the unfortunate event of bank closure, Abiru said: “It goes without saying that the financial sector requires to be continuously strengthened to be able to perform its role of intermediating between surplus and deficit units in the economy. It is in this light that I welcome the plan by the Central Bank of Nigeria to recapitalise the banks. In doing so, the CBN will be well advised to engage all critical Stakeholders including the National Assembly.”
Managing director and chief executive of the NDIC, Bello Hassan, noted that, Deposit Insurance System (DIS), is an important component of the financial safety-net, plays a crucial and indispensable role in the attainment of financial system stability, and called for support from the senate in aiding the corporation carry it’s mandate.
Hassan said: “In Nigeria, the effective discharge of the Corporation’s mandate since its establishment about 35 years ago, has gone a long way in engendering public confidence in our banking system, while also providing strong support to the monetary authority in the formulation and implementation of sound banking policies.
“However, it is instructive to point out that a strong and robust legal framework is at the heart of an effective Deposit Insurance System in any jurisdiction. It is against this backdrop, that Principle 2 of the International Association of Deposit Insurers (IADI) Core Principles for Effective Deposit Insurance, harps on the powers of a Deposit Insurer (DI). It underscores the necessity for a DI to have all powers necessary to fulfil its mandate and further emphasises that these powers should be formally specified in an enabling legislation.
“The above, and the benefits of sound oversight, have combined to underscore the significance of the legislature to the Corporation and the importance of harmonious working relationship between the two, in the interest of the banking system in particular and the economy in general,” he pointed out.