News
CBN Moves to Limit Lending to MDAs, Others
Central Bank of Nigeria (CBN) has directed banks in the country to increase the risk weight of loans to local governments, state governments and ministries, departments and agencies (MDAs) in a move to minimize some of the weaknesses in the banking system.
This in essence makes it difficult for any of them seeking bank loans or when they insist to pay very high interest rates for the money borrowed.
Mrs. Tokunbo Martins, CBN director of banking supervision, in a circular issued to all banks and discount houses in the country said that with this review, banks would now be required to make 200 per cent provisioning for loans to these borrowers since it has classified them as having 200 per cent risk of defaulting
The CBN stated that it had identified that recent crises in the banking industry had highlighted several weaknesses in the banking system.
According to the apex bank, a major contributor to these weaknesses was the excessive concentration of credit in the asset portfolios of banks, which cut across products, business lines and legal entities, among others.
It, therefore, urged banks to properly manage the concentration through the establishment of sound risk management processes.
However, the CBN said that investments in federal government bonds should continue to attract zero per cent risk weight, while state government bonds would remain at 20 per cent.
It said that where the exposure to any industry was in excess of 20 per cent of the total credit facilities of a bank, the risk weight of the entire portfolio shall be 150 per cent.
The apex bank said that total exposure to a particular industry would include off-balance sheet engagements in which the bank takes the credit risk.
The apex bank also emphasised that all the breaches of single obligor limits without the prior approval of the CBN would be regarded as impairment to capital.
The CBN also reviews how banks should henceforth treat credit transactions with related parties within a holding company structure, which should include the financial holding company (FHC) and other subsidiaries within the group.
To this end, in dealing with credit transactions by the bank within the group, FHC lending to a bank within its group should be treated as a liability, credit by a bank to its FHC should be regarded as a return of capital and deducted from the capital of the bank in computing its capital adequacy, while bank lending to subsidiaries within the group would be assigned a risk weight of 100 per cent where the credit is fully secured; otherwise it would be deducted from the capital when computing capital adequacy.
Nigeria has launched an emergency response centre after recording 190 deaths from Lassa fever, a viral hemorrhagic illness, according to Nigerian Center for Disease Control (NCDC).
The disease, mainly transmitted to humans via contact with food or household items contaminated with rodent urine or excrement, has infected 1,154 people in six Nigerian states.
Jide Idris, head, Nigerian Center for Disease Control, said the agency’s risk assessment has categorized it as high, prompting the activation of the emergency Operations Centre to manage the outbreak.
“While the disease occurs throughout the year, peak transmission typically happens between October and May, coinciding with the dry season when human exposure to rodents increases,” he said at a press briefing in Abuja.
The centre will ensure seamless coordination of the control and management of the outbreak.
Symptoms of the virus – which can also be passed between people through bodily fluids of those infected – include fever, headaches and, in the most severe cases, death.
The World Health Organization classifies Lassa fever as a priority disease due to its epidemic potential and lack of approved vaccines.
Federal government has proposed to spend N1.5bn for internet services for passengers at five international airports in the country.
The project, “Provision/Upgrade of WiFi Services for Passengers in Five International Airports and some Domestic Airports” was listed as a new project in the 2025 appropriation.
In some parts of the world, access to the internet via Wi-Fi at airports is regarded to be a basic human right.
Such amenities are lacking in Nigeria.
But the 2025 budget presented to the National Assembly last week by President Bola Tinubu saw the sum of N105.953,496,365 being allocated to the Ministry of Aviation.
Apart from internet access at the airports, some other capital allocations were reinstated for the Nigerian Airspace Management Agency (NAMA).
In previous budgets, three agencies of the ministry including the apex regulatory agency, the Nigeria Civil Aviation Authority (NCAA); the Federal Airports Authority of Nigeria (FAAN) and NAMA were exempted from the annual budgetary allocation.
In addition, the federal government deducts 50 per cent of the Internally Generated Revenue (IGR), which is against the standard and recommended practices of the International Civil Aviation Organisation (ICAO), which recommends that the funds generated by the agencies should be reinvested into improving infrastructure and boosting aviation safety.
Fidelis Egueke, former bank manager, , has been convicted and sentenced to six months in prison by an Asaba, Delta State Chief Magistrate’s Court for defrauding a victim of $46,900.
Chief Magistrate Callistus Isioma Moeteke found Egueke guilty of a single charge brought against him by the police under case number CMA/295c/2024.
Raphael Eze, prosecutor, of the State Criminal Investigation Department (SCID), Asaba, said Egueke, a former Asaba branch manager of a tier-one bank, fraudulently obtained $46,900 by using two Certificates of Occupancy (CofOs) as collateral.
One of the land titles, however, was not his, and the other was fake.
After receiving the money, Egueke used it for personal expenses and failed to repay the victim as promised.
The prosecution argued that Egueke’s actions violated Section 419 of the Criminal Code Law, Cap C21, Vol.1 Laws of Delta State, Nigeria, 2006.
Despite denying the offence, Egueke failed to present evidence of repayment during the trial.
Chief Magistrate Moeteke determined that the prosecution had proven its case beyond a reasonable doubt.
Egueke was convicted and sentenced to six months imprisonment.
However, the court also gave him the option to pay a fine of N350,000 in lieu of serving the prison term.
The court ordered Egueke to pay N30 million in restitution to the victim within six months of his conviction.
The charge against Egueke stated that, in 2016, he fraudulently obtained a credit facility worth $46,900 (approximately N60 million) from Chief Jude Ndudi by presenting false documents, including land titles that did not belong to him, in violation of Section 419 of the Criminal Code Law.
Egueke is also facing trial before a Lagos Federal High Court on charges related to a separate fraud case involving N179.498 million.
He is being prosecuted by the Force Criminal Investigation Department (ForceCID), Annex Alagbon-Ikoyi, Lagos.
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