By NAOMI UZOR

The Bank of Industry (BoI), has said that stringent policies employed by banks in order not to run foul of Central Bank of Nigeria’s (CBN) prudential guidelines are disadvantageous to Micro, Medium and Small Entrepreneurs, MSMEs.

Speaking at the Public-Private Dialogue with the theme”Credit Bureaus and Access to Finance”, organised by the Credit Bureau Association of Nigeria (CBAN) and the Nigerian Association of Small and Medium Enterprises (NASME), General Manager, Risk Management Division, Bank of Industry (BoI), Dr. Ezekiel Oseni, said, in order not to run foul of Central Bank of Nigeria’s (CBN) prudential guidelines and ensure that the shareholders’ funds are not eroded with loan provisioning, the banks have no choice than to put up very stringent policies that would ensure that they create quality risk asset portfolios which would require little or no provisioning for non-performing credits.

”Unfortunately, the stringent policies are at a disadvantage to MSMEs who are unable to meet the borrowing conditions of the banks. For example, provision of audited financial statements, satisfactory operation of current accounts for a certain number of years, robust projected cash flows, and availability of acceptable collaterals are some of the conditions to accessing loans from the banks. These conditions are beyond what many MSMEs can meet” he stated.

Therefore, he said, there is need for a central database from which consolidated credit information on borrowers could be obtained as imperative to forestall single customers multiple exposure.

It assumed that with a centralized database updated and accessible by all lenders in the industry, it would be easy to determine the credit worthiness of the potential borrowers judging from its past and present credit performance with other lenders.

”This, among others, is also expected to lessen the stringent lending conditions of the banks and thereby provide better and easy access to MSMEs to obtain bank loans. The question therefore is: with the CBN CRMS and the privately licensed credit bureau to which all lenders are under obligation to provide and access credit information about their existing and potential customers, are the rates of non-performing loans on the decline and are the MSMEs lots in accessing banks loans now better?” he said.
Chairman, Credit Bureau Association of Nigeria (CBAN), Mrs. Mobolanle Adesanya, said, there is no gainsaying the fact that MSMEs form the bedrock of economic successes in more developed economies around the world, adding that, the empowerment of the vast majority of the people who run these small business concerns is most critical as it ensures their participation, thereby increasing overall productivity.

”Unfortunately, in our country, the MSMEs sector is rudimentary and undeveloped. The major reason we are in this situation is essentially because financial products and services that are critical to the growth of business continues to elude this particular demographic of society.

Technically speaking, these ones are said to be financially excluded” she stated.

According to her, as it stands, going by the most recent available statistics (2012), as high as 46.3 per cent of Nigerians of Nigerians are financially excluded, attributing the bulk of our collective economic successes to the effort of the government, a handful of industrialists, the big multinationals, and other big players in the economy.

”In a bid to reduce the incidence of toxic and non-performing loans within the financial system, credit bureaux are charged with the responsibility of evaluating customers credit worthiness by poring through and assessing their already-existing credit history, and issuing credit scores and ratings, which information lenders base their lending decisions on when handling loan applications.

Presently, because credit bureaux are mandated to rely solely on financial records, and giving the high number of people who still exist outside the banking sector, we are stuck in a seeming vicious cycle where financial institutions and mainstream lenders can only advance credit to members of society who are already in the banking system and with verifiable means of identification for risk management purpose” she said.