Business
CBN goes after states, farmers over N600b unpaid loans
The Central Bank of Nigeria (CBN) has begun an aggressive drive to recover the loans it gave out under its development finance interventions.
Top on the list of debtors are state governments whose monthly Federation Account Allocation Committee (FAAC) accruals are already being debited directly every month. The deductions will last six months.
Director, Development Finance of the CBN Yusuf Yila, who disclosed this during a post-Monetary Policy Committee (MPC) in Abuja yesterday, did not name the debtor states.
Yila, who named the Anchor Borrowers Programme (ABP) and Commercial Agric Credit (CAC) as some of the intervention programmes, said: “Every person(s) or state that took that loan (ABP) is going to pay. We have their BVN.”
Such persons referenced by Yila are smallholder farmers, who received funds for farming from state governments via the ABP, but have yet to pay them back.
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The CBN director added that the apex bank was collaborating with the Economic and Financial Crimes Commission (EFCC) to ensure that the loans were recovered.
Yila said while the ABP loan repayments were particularly poor, that of CAC was almost excellent.
Under the ABP, the CBN gave out about N1 trillion but recovered only N400 billion. But under the CAC, the bank. lent out about N800 billion and recovered N700 billion.
His words: “We have started recovering loans from state governments. We have been doing a loan workout programme with them and we are debiting their monthly FAAC accruals directly for the loans.
“If a state government has taken N1 billion and is already in default, over a six-month period, we debit them N150 million every month. So, we’ve started that programme..
“So, every single loan that has been given out through any of our intervention programmes must be paid back.
“There is the ABP which is a primary consumption element of our interventions. We lent out N1 trillion for the ABP of which we have gotten over N400 billion back.
“Every single person or state that took that loan (ABP) is going to pay. We have their BVN. In fact, we have started implementing the Global Standing Instruction (GSI).
“We will continue to pull the account in the bank that they lent to or whichever bank that they have account. Anytime we see money in that account, we will recover it.
“We are working with the EFCC. The CBN governor has approved the collaboration with the EFCC on loan recoveries.”
Yila also said that credit facilities extended to businesses and individuals have not performed poorly.
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According to him, out of the N9 trillion intervention fund to spur economic growth, about N5 trillion is still under moratorium.
Another staff member of the CBN, who did not want his name in print, said there was “an intervention facility that state governments accessed for projects but had failed to pay back.”.
He explained that “the CBN wrote to the states reminding them of payment as per our recovery drive but they decided to fight back by seeking the reduction of the bank’s powers.”.
The staff member made reference to the debate by the Senate on Tuesday on whittling down the powers of the CBN governor.
The Director, Banking Supervision of the CBN, Haruna Mustapha, spoke on the implications of Tuesday’s interest rate hike by the apex bank.
Mustapha said that “banks will make more profit from interest charged on loans and will reprice existing loans to borrowers.”
This, according to him, “will be transferred to bank customers and this will add to cost of borrowing. “
Adding that “interests on government securities will also go up, ” he said the CBN has given approval to banks to increase interest on savings deposits to 30 percent effective.
“We increased it from 10 percent to 20 percent and it stands to reason that since we hiked MPR yesterday(Tuesday) to 15.5 percent, it will change the equation. The effective date is September,” Mustapha said.
The Nation
Business
Forex: FG to delist naira from P2P platforms
Forex: FG to delist naira from P2P platforms
The Federal Government is set to delist the naira from all Peer-to-Peer platforms to reduce the manipulation of the local currency value in the foreign exchange market.
Director General of the Securities and Exchange Commission, Emomotimi Agama, made this known on Monday at a virtual conference with blockchain stakeholders.
The goal of this resolution is to combat manipulation of the value of the local currency in the foreign exchange market.
In past months, the nation’s regulatory bodies have started looking into and closely examining cryptocurrency exchanges.
This is part of a number of regulations to be rolled out in the coming days.
He said, “That is one of the things that must be done to save this space. The delisting of the naira from the P2P platforms to avoid the level of manipulation that is currently happening.
“I want your cooperation in dealing with this as we roll out regulations in the coming days.”
The SEC DG decried how some market players were manipulating the value of the naira.
This, he said, was why the commission was “seeking collaboration and help in making sure that the crypto environment is respected globally”.
Business
Ikeja Electric cuts tariff for Band A customers
Ikeja Electric cuts tariff for Band A customers
The Ikeja Electricity Distribution Company has announced a reduction in the tariff for customers under Band A classification from N225 per kilowatt-hour to N206.80kw/h
This is coming about a month after the Nigerian Electricity Regulatory Commission (NERC) approved an increase in electricity tariff for customers under the Band A category to N225 per kwh — from N66.
The commission has clarified that customers under Band A receive between 20 and 24 hours of electricity supply daily.
Ikeja Electric said in a circular on Monday the cut in the new tariff rate would take effect from May 6, 2024.
Business
Finally, NERC unbundles TCN, creates new system operator
Finally, NERC unbundles TCN, creates new system operator
The Nigerian Electricity Regulatory Commission (NERC) has set up the Nigerian Independent System Operator of Nigeria Limited (NISO) as it unbundles the Transmission Company of Nigeria (TCN).
The transmission leg of the power sector has over the years been seen as weakest link with obsolete equipment.
The unbundling announcement is contained in an Order dated April 30, 2023 and jointly signed by NERC chairman, Sanusi Garba, and vice chairman, Musiliu Oseni.
By this order, the TCN is expected to transfer all market and system operation functions to the new company.
The commission had previously issued transmission service provider (TSP) and system operations (SO) licences to the TCN, in accordance with the Electric Power Sector Reform Act.
The Electricity Act 2023, which came into effect on June 9, provided clearer guidelines for the incorporation and licensing of the independent system operator (ISO), as well as the transfer of assets and liabilities of TCN’s portion of the ISO.
In the circular, the commission ordered the Bureau of Public Enterprises (BPE) to incorporate, unfailingly on May 31, a private company limited by shares under the Companies and Allied Matters Act (CAMA), 2020.
NERC said the company is expected “to carry out the market and system operation functions stipulated in the Electricity Act and the terms and conditions of the system operation licence issued to the TCN.
“The name of the company shall, subject to availability at Corporate Affairs Commission, be the Nigerian Independent System Operator of Nigeria Limited (“NISO”),” NERC said.
Citing the object clause of the NISO’s memorandum of association (MOU) as provided in the Electricity Act, NERC said the company would “hold and manage all assets and liabilities pertaining to market and system operation on behalf of market participants and consumer groups or such stakeholders as the Commission may specify.”
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