The Managing Director of Maxifund Securities Limited, Mr. Okechukwu Unegbu, has advised banks to adopt mediatory process in resolving disputes expected to arise between them and their debtors due to the disruptions by the COVID-19 pandemic.
Unegbu, a former President of the Chartered Institute of Banker of Nigeria (CIBN) and a former chief executive of the defunct Progress Bank, said this in a paper he presented at the monthly forum of the Financial Correspondents Association of Nigeria’s (FICAN) webinar titled: “COVID-19 and the Future of Banking,” organised in Lagos at the weekend.
He urged banks to put on a human face in dealing with their respective clients.
Unegbu explained: “They must add human face to their operation by sitting down with their debtors to find out how to enable them to bounce back.
“Banks should tell their debtors something about their plans on managing the interest rate on facilities they have given to them. They must sit down with them and offer them a lee way that will enable then to bounce back from the impact of COVID-19 on their businesses.
“By resorting to the courts or arbitration, it will not be of any help because there are so many issues to look into that will make legality to be of any assistance.”
He suggested that banks should grant their clients a moratorium on the principal and as well as the interest rate on the facilities by 50 per cent in order to avert high incidence of non-performing loans (NPLs).
He also predicted that banking in the post COVID-19 era would thrive by training and improving employees’ skills and knowledge on the critical areas of banking operations and services to clients rather than laying all the emphasis on deposit mobilisation.
Unegbu, who is also a legal practitioner said Nigeria must do everything possible to avert the occurrence of what he termed, the “W” curve in the management of the pandemic in the country, saying a resurgence of the pandemic would be too devastating to the economy and the financial system, especially the banking sub-sector.
He stated that the future of the banking sector would depend on digital platforms, strengthened cyber security measures, adequate collaboration with fintechs, to be able to offer robust services to their customers and enhance financial inclusion.
“The bank of the future should create credit culture in the economy by allowing Nigerians who are working and earning monthly wages to have access to credits. They should create mortgage products that can run for at least 10 years,” Unegbu said.
He warned that all effort should be made to ensure the survival of small businesses, which are the largest employers of labour. This, according to him, would reduce the sufferings of households as a result of the aftermath of the COVID-19.
“I think it is time for the CBN to go to its drawing table to find out some of its regulations it would relax because most of these banks, including the micro-finance banks, have been badly hit. This would enable banks to fund small businesses that must have been forced by the lockdown to eat into their capitals. We are in a war situation.”
He also advised households to do away with luxuries and concentrate on the essentials, especially foods, children education fees and house rents in order to cope with the post COVID-19 economic difficult terrain.
Unegbu also advised state governments to recruit the services of financial experts who are knowledgeable in public finance in order to rejig their budgets in line with the collapsing oil prices.