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Nigerians have been reassured by the Central Bank of Nigeria (CBN) that the financial sector is sound and unfounded in worry. The Nigeria Deposit Insurance Corporation (NDIC) has started the process of paying depositors of insolvent banks as the apex bank’s guarantee was released.
Although the exercise has caused Nigerians to worry about the financial stability of other banks, the CBN informed them that there is nothing to worry about at its most recent Monetary Policy Committee (MPC) meeting for July 2023. The apex bank asserts that the resilience of Nigerian banks and important financial soundness indicators are both mostly stable. Part of the statement made public following the MPC meeting states;
”Financial Soundness Indicators (FSIs) in the banking system remained strong and stable. As of the end of June 2023, the Liquidity Ratio (LR) was 48.4 percent, the Non-Performing Loans (NPLs) ratio was 4.1 percent, and the Capital Adequacy Ratio (CAR) was 11.2 percent”.
A bank could experience stress, according to financial analyst Godwin Unegbu, a former president of the Chattered Institute of Bankers of Nigeria (CIBN). “Nigerians think the money they borrow from banks is national cake,” he remarked. They are constantly reluctant to repay, which has contributed to the banks’ issues.
“All banks have that issue; the only ones who can continue to receive funding from deposits will not experience the issue of distress.” Furthermore, according to Prof. Uche Uwaleke of Nasarawa State University Keffi, the apex bank continually upheld the DMBs’ solid financial standing. Uwaleke added that only the CBN was qualified to judge whether a bank was financially sound or not. In particular, this relates to capital adequacy, liquidity ratios, and nonperforming loans.
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