By Bassey Udo
Banks, under the aegies of the Bankers’ Committee, on Thursday moved to implement key monetary policy measures to rein in inflation and mitigate the risks of cyber security threats to the country’s financial system.
Some of the decisions were the outcome of discussions by the Managing Directors and Chief Executives of banks in the country during the 364th meeting of the Bankers Committee of the Central Bank of Nigeria (CBN) presided by the apex bank’s governor, Godwin Emefiele.
During the last Monetary Policy Committee (MPC) meeting, members noted the impact of the escalating inflation in the economy and resolved to settle for some monetary policy decisions that would help check the trend and ensure the financial system stability.
Part of the key decisions included the increase by 150 basis points the monetary policy rate (MPR), which determines the controlling lending rate by commercial banks, and the increase in the cash reserve ratio (CRR) from 27.5 percent to 32.5 percent. CRR represents the percentage portion of cash savings maintained by the banks with the Central Bank.
During the Bankers’ meeting on Thursday, the MD of Lotus Bank, Kafilat Araoye, said the bank CEOs noted the basis of the decisions and the need for strong support by banks to implement them.
Araoye said the effective implementation of these decisions would help to mop up excess liquidity in the financial system while reducing demand pressure on the Naira,
Besides she said higher CRR policy was a global best practice to reduce money in circulation to minimise the pressure on foreign exchange through a simple demand and supply theory, especially when some of the requests are somehow unfounded.
The decisions, she noted, were to ensure all efforts made in the past to curb inflation in the economy comes to fruition
“Part of what this will also do is to ensure that the excess funds with banks as current account is kept safely, only to be released when truly needed,” she said.
While assuring all the banks were fully in support of the decisions, Araoye expressed the belief that everybody within the country would understand the move behind the decisions.
On efforts to curb cyber security threats, which has posed a serious challenge as one of the unintended consequences of automation and digitization of the financial system, the MD of MD of Citi Bank, Iretiogo Samuel-Ogbu, said vision in the banking industry was to adopt counter-measures to mitigate the risks.
To prevent cyber-attacks on the financial system, Samuel-Ogbu said the banks resolved to adopt strategies to deter attackers predicting and preempting an evil plan or threats to cyber-security.
He said cyber-security threat center was being envisioned to be built and assembled to check possible threats to the financial system.
By having this collective approach as an industry, he said, would help to mitigate the vulnerability of the risks of cyber-attacks and provide information sharing across the industry in case of any breach.
“Having that kind of coordinated efforts means the banks would be able to minimize damage and enhance recovery time,” he said
The National Fusion Centre, which is a key initiative of the CBN in collaboration with the bankers committee, as one of the industry’s response to address the issue of cyber security, as a collective protection to safeguard the critical information infrastructure.
The security centre was being housed in the CBN until a purpose building was located.
The centre, he noted, was in line with global best practice, where professionals from information security, investigative services, technology infrastructure are brought together to undertake strategic intelligence and analysis and share information industry wide.
In terms of RT200 scheme introduced in February to generate $200 billion of foreign exchange from export proceeds based on the provision of incentives, the Citi Bank boss said the whole idea behind the initiative was to diversify the sources of FX away from the dominance of oil and to increase the contribution of non-oil exports, to create availability and to support export-oriented companies to expand operations and capabilities.
He said the initiative was beginning to bear fruits, with a total of about $1.28 billion repatriated as at the end of the third quarter in September 2022.
Out of that figure, he said a total of $870 million was sold to the import and export (I&E) window, which ended up in terms of rebates paid by the CBN at N65 to the dollar totalling N42 billion in the third quarter.
The amount of foreign currency from foreign export proceeds, he reported, was very encouraging year-on-year.
During the meeting, the Managing Director of DBS, Haruna Mustafa, is said various committee reports were presented by various sub-committees ranging from ethics and professionalism, payment systems and infrastructure.
The presentation of the report on Domestic Card scheme by the MD of Nigeria Inter-Bank Settlement System (NIBSS), Premier, showed that the scheme, which is the brain work of the CBN, is was being deployed to help improve the payment landscape across the financial ecosystem in Nigeria.
Owoh said part of CBN’s proposition was for the scheme to help drive acceptance and efficiency, reduce the card operating cost in the country, and provide efficient and reliable services, as other features and products would depend on the card.
He said the card would have unique features configured on it to address the unique financial ecosystem issues in the country, to help improve payments nationwide.
The banks are expected to provide affordable pricing, with charges for using the card expected to be lower, since it would be charged for in Naira as against foreign currency.
The card would support micro payment and credit, e-government identity management, transportation, health sector, and agriculture in terms of payment.
In addition, the card would be expected to reduce the dependence on cash along the financial landscape and help promote the cashless initiative driven by the CBN.
“The operational effectiveness of this card is expected to be robust, and it should drive a lot of innovation, standardization, then full end-to-end visibility to improve fraud management and better dispute resolution process around the card operating system,” Owoh said.
“Local competence for the card and payment scheme will also be deepened within the ecosystem. Again, improved sovereignty and security of our data and operations will be locally based. It will also help to improve and drive financial inclusion across the federation. This card will be a platform and a lot of products will be layered across it, ranging from debit card, virtual card, credit card, non-interest card which will specifically address the needs of the Muslim segment of the country, then identity card any form of card scheme can be layered on this platform”, he added.