The Vice President, Prof Yemi Osinbajo, on Monday decried the low impact of commercial banks on the citizenry with no fewer than 40 per cent of the people under-banked.
He said this in a remark at the public presentation and launching of the book Osinbajo said: “Banking Reform in Nigeria: the Law, the Prospects and the Challenges’’ written by a doctor of Law, former lecturer in the University of Ife and a member House of Representive, Bode Ayorinde in Abuja.
“It is perhaps accurate to say that for most Nigerians, banks have not really significantly impacted their lives or livelihoods.
“First, the under-banked population is said to be in the order of about 40 per cent, which means that a significant number do not even have access to banking facilities let alone banking products of any kind.
“The majority of those who have bank accounts for a variety of reasons are not able to access personal loans, mortgage or business loans.
“This explains why financial inclusion has gained inclusive currency and resonance in the past few years.’’
According to Osinbajo, depositors give their hard-earned funds to the banks at single-digit interest rate but cannot get anything less than double-digits when they seek the same funds for their businesses or mortgages for homes.
He noted that the practice occurred against the backdrop of what seemed to be regular declarations of hefty profits by banks.
The Vice President stated that the issue was not just about safe keeping of funds especially for the poor and those in the rural areas.
He said everyone should have access to financial products designed for low income earners as well as for the SMEs.
Osinbajo stated that when the administration started the conditional cash transfer scheme for the poor it experienced the banking problems first hand.
He said the government had relied on the words of enthusiastic banks for sending N5,000 to the first batch of the One million poor but got disappointed when the banks could not perform.
He said that by the way bank businesses were designed in the country there was little room for financial inclusion and little room for those who could pay the banks charges.
He, however, said it was not the fault of the banks alone as the financial system favoured the strong and excluded the weak.
Osinbajo noted that there was a need to use mobile banking as an important tool to reach more Nigerians.
He said: “It is an important consideration in any economy that the banking system must be able to provide loans adding that the intention of the administration was to facilitate the growth of SMEs.
Osinbajo stated that the author had stirred intellectual discourse on the subject matter and there was the need for all to pay attention to his suggestions and adapt those that could propel the economy.
Accordingly, he said banking supervision was crucial as regulation was at the heart of the financial system.
He said: “Regulation is at the heart of our whole financial and economic system.
“One thing that we have learnt from the last decade is that more often than not it is these ordinary citizens who pay for the misadventures of the financial services sector and the failures of government regulation.
“Not only do they lose their homes and moneys, sometimes even their live savings they also shoulder the cost of the bail outs in the banks.
“This is why, it is my view that independence governance of the CBN and closer and more regular forensic scrutiny of banks is fundamental.’’
According to Osinbajo, it is not more rules and regulations but greater enforcement.
He said: “It is holding our bankers to account; it is insisting that they keep their books honestly and transparently and to sanction effectively those who so often step out of line.”
He expressed gratitude on the conversation of the book on the financial sector and the economy adding that it would be a worthwhile contribution on what needed to be done in the regulation of the financial system.