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By NBF News
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THE nation's insurance industry has commended the Central Bank of Nigeria (CBN) for abolishing the Universal Banking System and ushering in a new banking model that will provide a level playing field for all practitioners to operate professionally in the financial services sector.

Chieftains of the industry, who spoke with The Guardian said that it was a welcome development because the new banking model would allow bankers to concentrate on core banking business that would not in any way compromise efficiency or professionalism but promote healthy competition and core competencies in the financial services industry.

It would be recalled that the CBN recently came out with a guideline that ushered in a new banking model, which kicked off on November 15 this year, ending the Universal Banking model effectively from that date.

The apex bank stated that from the effective date, the definition of banking business shall be as contained in Section 66 BOFIA, limiting banking services to Commercial Banks, Merchant Banks and Special Banks, which include non-interest banks, Micro-Finance Banks, Development Banks and Mortgage Banks.

Director-General, Nigerian Insurers Association (NIA), Olorundare Thomas, said: 'We can comfortably say that the Universal Banking model is dead in this country. In my view, I think it is good for the economy because it will provide a level playing field for all practitioners to operate efficiently.

'It will promote healthy competition in the financial services markets and provide core competencies in their operation. You do what you can do best. Bankers will concentrate on core banking business, insurers will perform their core risk-bearing function professionally and above all it will reduce unethical practices in the system.'

President, Nigerian Council of Registered Insurance Brokers (NCRIB), Teslim Sanusi, said: 'We commend the apex bank for the bold and courageous step it has taken to abolish Universal Banking operation in this country.

'It is not that the Universal Banking model is bad per se, but the mode of operation and implementation was bad for this economy. I believe the new model will promote a level playing field for all practitioners to operate efficiently, professionally their core businesses, with core competences in the field of specialisation.'

Also, Lagos Area Committee Chairman, NCRIB, Tade Oguntade, argued that the new banking regime 'will enthrone professionalism in the conduct of business in the financial services sector and promote healthy competition. The armchair professionals will now go out to look for business, thus helping to reduce some of the insider abuses, which will add value to the customers in the delivery of services.'

Sanusi added: 'In Nigeria, what has happened is that the banks have not been able to ensure that the core business of banking is professionally and efficiently done to warrant diversification.

Besides, some of the banks were involved unprofessionally in the areas they have diversified. With the new development, I think all the lapses that have been noticed will be eliminated, and bankers, insurers will be able to operate efficiently in the area of core competencies.'