CBN’s decision to increase DMBs’ capital base, a welcome development - Experts

By Abiodun OBA

The decision of the Central Bank of Nigeria (CBN) to further recapitalise Deposit Money Banks (DMBs) in the country has been described as a welcome development.

Two financial experts gave the commendations in separate interviews with the News Agency of Nigeria (NAN) on Sunday in Ota, Ogun.

Recall that Mr Olayemi Cardoso, the CBN Governor, had on Friday at the 58th Annual Bankers’ Dinner organised by the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos, said the apex bank was planning new round of recapitalisation for the commercial banks.

The last time CBN enforced banks to recapitalise was in 2004, when Charles Soludo, former CBN Governor, raised their capital base from N2 billion to N25 billion.

Dr Samuel Nzekwe, former President, Association of National Accountants of Nigeria (ANAN), described the decision of the apex bank to increase the capital base as a welcome development.

Nzekwe said that Nigerian banks needed to recapitalise because the country ‘s currency had been devalued due to the rising inflation rate in the country.

According to him, the inflation is so high that what they have in the system might not be enough to back up any financial obligations that may come.

“There is the need for banks to recapitalise so that they can continue to exist.

“In addition, they need to recapitalise a little bit so that they can be in strong fittings in case of any eventuality and problems,” he said.

The Ex-ANAN president emphasised the need for banks to raise their capital base further to meet the challenges of the current time.

Dr Titus Okunronmu, former Director, Research Department of CBN, said that the CBN’s planned recapitalisation of banks was a step in the right direction.

Okunronmu said it would put the banks in a better position to grant credit to the public.

He added that this would also help them to face future’s challenges.