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Banks to debit debtors accounts directly

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The Central Bank of Nigeria (CBN) has released guidelines on Global Standing Instruction (GSI) that would enable banks to debit the account of loan defaulters without recourse to the account holders.

The CBN released the guidelines in Abuja on Monday.

According to the guidelines, the GSI will “serve as a last resort by a Creditor bank, without recourse to the Borrower, to recover past-due obligations.

The GSI will specifically target Principal and Accrued Interest only while “excluding any Penal Charges from a defaulting Borrower through a direct set-off from deposits/investments held in the Borrower’s qualifying bank accounts with participating financial institutions.”

The objectives of GSI, the CBN said, include facilitating an improved credit repayment culture; reducing Non-Performing Loans (NPLs) in the banking industry; and watch-listing consistent loan defaulters.

The types of accounts that qualify for GSI are Individual Savings Accounts; Individual Current Accounts; Individual Domiciliary Accounts; Investment/Deposit Accounts (Naira and Foreign Currency); and Electronic Wallets.

Henceforth, bank debtors are expected to execute a GSI mandate in hard copy or digital form; ensure that the terms and conditions of the mandate are clearly understood before execution; and ensure that all qualifying accounts are linked to his/her BVN.

According to the CBN: “In the event that a borrower’s qualifying account is not linked to his/her BVN, such BVN shall be Watch-Listed.”

The Creditor Bank, on its part, will ensure that borrowers are properly educated about the GSI mandate and its implications; and enshrine same in their loan application process.

Also, the banks are expected to “review and validate the GSI mandate instrument prior to loan disbursement.”

The banks are to indemnify Nigeria Inter-Bank Settlement System Plc (NIBSS) and other Participating Financial Institutions (PFI) from all liabilities that may arise from inappropriate use of the GSI infrastructure.

They are to also “retain copies of physical or digital version of the executed GSI mandate and to provide same when required. The banks are to ensure that the GSI Trigger Amount is only for outstanding Principal Amount and Accrued Interest (excluding ANY Penal Charges).”

The banks were ordered to comply with CBN’s Prudential Guidelines as it applies to the classification of loans; and as a risk management tool, the MD/CEO of each PFI “shall routinely update the Board of Directors on the GSI process as it relates to the frequency of use and amounts recovered or released.”

The guidelines note that PFI’s MD/CEO are not absolved of the overall responsibility over activities of the bank.

“Any loan for forbearance review must show evidence of GSI trigger otherwise full provisioning would be required (except where there are CBN permitted waivers),” the guidelines stated.

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Increasing cases of COVID-19 necessitates fall in Oil prices

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The growing rate of coronavirus across the world has necessitated low demand in oil at the international market.
Oil prices slid on Tuesday amid concerns that a nascent recovery in fuel demand could stall as a fresh wave of COVID-19 infections around the world sparks tighter lockdowns.

This is just as major producers ramp up output.

U.S. West Texas Intermediate, WTI, crude futures fell 30 cents, or 0.7 per cent to $40.71 a barrel at 0414 GMT, while Brent crude futures fell 37 cents or 0.8 per cent to $43.78 a barrel.

The slide comes after WTI rose 1.8 per cent and Brent climbed 1.5 per cent on Monday on better-than-expected data on manufacturing activity in Asia, Europe and the United States.

The activity is showing factories were emerging from the worst of the early coronavirus pandemic impact.

“On the demand side, we had quite encouraging global manufacturing (data) … but there’s still quite a bit of evidence of the oil demand recovery stalling in quite a few markets with a resurgence of COVID-19,’’ said Lachlan Shaw, Head of commodity research at National Australia Bank (NAB).

Denting fuel demand, cities from Manila to Melbourne are tightening lockdowns to battle new infections, while Norway has stopped cruise ship traffic in the latest European travel alarm.

In a further sign of a patchy rebound in demand, analysts estimate U.S. refined product stockpiles rose last week, according to a preliminary Reuters’ poll ahead of data due from the American Petroleum Institute industry group later on Tuesday and the U.S. government on Wednesday.

Five analysts estimated, on average, that U.S. inventories of gasoline rose by 600,000 barrels.

Distillate stockpiles, which include diesel and heating oil, likely grew by 800,000 barrels, while crude stocks fell by 3.3 million barrels in the week to July 31.

At the same time producers in the Organisation of the Petroleum Exporting Countries, OPEC, and its allies, together known as OPEC+, are stepping up output this month, adding around 1.5 million barrels a day of supply.

U.S. producers also plan to restart shut-in production and inventories remain near historical highs.

“I think it is fair to say that most oil market participants expected more downward pressure on oil to start the week with COVID-19 ravaging the landscape and OPEC+ adding more barrels into play,’’ said Stephen Innes, Chief Global Markets Strategist at AxiCorp, in a daily note.

Reuters/Signaturetv.org

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Banks raise lending rates to 30 per cent

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Customers are paying more on loans and getting less on deposits from commercial banks, a Central Bank of Nigeria (CBN) report has said.

They paid between 15.01 percent and 30.70 percent on borrowed funds but the interest paid on their term deposits dropped by 1.46 percent to 6.27 percent, the CBN’s economic report for the first quarter of the year shows.

The report released at the weekend indicated that the average prime and maximum lending rates rose by 0.02 percent point and 0.47 percent point, respectively, to 15.01 percent and 30.70 percent, in the review period. The percentage were above their levels in the preceding quarter.

The average prime and maximum lending rates stood at 29.98 percent and 14.99 percent respectively in the fourth quarter of last year.

The rising lending rates, analysts said, have led to upward pressure on market rates and the cost of production for the manufacturing sector.

The CBN observed that despite the rise in lending rates, banks were paying less deposit interest to depositors. The average term deposit rate fell by 1.46 percentage points to 6.27 percent. The spread between the average term deposit and average maximum lending rates widened by 1.93 percent points to 24.43 percent points.

The margin indicated that customers are paying a 24.43 percent higher fee than they are getting from banks.

However, the Monetary Policy Rate (MPR), which is the benchmark for the interest rate at which the CBN lends to the commercial banks, is currently at 12.5 percent.

Despite the rise in lending rates, CBN Governor, Godwin Emefiele said aggregate domestic credit (net) grew by 5.16 percent in June 2020 compared with 7.47 percent in May 2020.

The total gross credit in Nigeria rose by N3.33 trillion from N15.56 trillion at end-May 2019 to N18.90 trillion at end-June 2020.

These credits were largely recorded in manufacturing, consumer credit, general commerce, and information and communication and agriculture, which are productive sectors of the economy.

The CBN said the rise in interest rate reflected liquidity in the system. It explained that the inflation rate of 12.26 percent for March 2020 resulted in negative real rates for deposits, but positive real rates for the prime and maximum lending rates.

“With the headline inflation at 12.26 percent in March 2020, all deposit rates remained negative in real terms, while prime and maximum lending rates were positive in real terms,” the report said.

Continuing, the report showed that money market rates were generally stable and moved in tandem with the level of liquidity in the first quarter of 2020. Daily interbank call and Open Buy Back (OBB)-discountable securities traded in the Nigerian Inter-Bank financial transactions- rates ranged from five percent to 7.24 percent and 1.77 percent to 21.02 percent, respectively.

The average interbank and OBB rates were 10.68 percent and 12.08 percent, respectively. Other rates, such as the seven-day and thirty-day Nigerian Inter-bank Offered Rate (NIBOR) traded at 11.74 percent and 9.81 percent, respectively.

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COVID-19: Charter airlines defy flight ban, fly rich Nigerians abroad

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Some charter airlines have begun offering services to members of the public despite a ban on international flights by the Federal Government due to the COVID-19 pandemic.

It was also learnt that some commercial flights that were contracted by foreign missions to evacuate stranded citizens from Nigeria were also being used to convey passengers at an extra fee.

According to multiple Ministry of Aviation and airline sources, several Nigerians and foreigners have been travelling in and out of the country via the private charter and evacuation flights.

A top source at the Ministry of Aviation said that the process of seeking approval from the ministry had become very easy and porous hence the current development.

While passengers with very deep pockets patronise charter airlines, others without the means join evacuation flights that have been commercialised.

“If you have a valid American residence/passport or British visa and the right money, I get you on a flight by Sunday morning,” a source in the ministry boasted.

When asked to explain, he stated, “If you own a private jet, all you need to do is write a letter to the minister indicating that you need to travel for medical reasons. And you would be given approval almost immediately. Once you are given the approval, you can add people to the flight under the guise that they are your personal staff or family members.

“These people who are supposed family members or personal aides are actually passengers who could pay you between $4,000 and $8,000 and sometimes $14, 000 depending on your destination and the kind of aeroplane you are flying.”

The official explained that nobody really investigates who is being conveyed on the plane.

He recalled what happened in the case of Musician, Azeez Fashola, aka Naira Marley, who travelled with several others from Lagos to Abuja to attend a concert during the ban on local flights.

The official added, “If you recall the case of Naira Marley, Executive Jet Services which flew him had received approval from the ministry under the guise that it was flying an Appeal Court Judge, Justice Adefope Okogie, from Lagos to Abuja.

“The names of Naira Marley and nine others were on the list but different names were given to the control tower by the captain and everything went smoothly and they would have got away with it if not for the controversy generated by the concert. That is how things have been going on in the aviation sector lately.”

On the evacuation flights, the official further explained that some officials of foreign missions were colluding with some international commercial airlines to fly Nigerians in and out of the country.

He explained that when some flights come for evacuation, they also take some Nigerian citizens at a different and more expensive fee.

The official stated, “Most times, when they want to evacuate foreign nationals, the ambassador of the foreign country would write to the Ministry of Foreign Affairs and the approval is usually automatic, based on international law.

“Once they get the approval, a letter is sent to the Ministry of Aviation which gives the final approval. These approvals are given automatically. Once the planes arrive, they evacuate their citizens along with Nigerians who have valid visas. Don’t you find it strange that more evacuations are going on now than during the lockdown itself?

“Have you asked yourself why during this ban on flights, several artistes and VIPs have been travelling to give birth abroad?

“I know several international airlines that have been doing this. The two biggest culprits are based in Western Europe. They come on a regular basis under the pretext that they want to evacuate and then move Nigerians along with them.”

A former chief executive officer of a local airline said many people he knew had been travelling in and out of the country in the past few months through the so-called evacuation flights.

The source said, “I have a friend that has travelled three times to the United States of America in the past four months. He just left Lagos last night again on one of the European airlines which have been running evacuation flights. He has American permanent residence too. So it is easy for him to join the evacuation flights.”

He added, “It is common knowledge. Why do you have more evacuation flights these days when the lockdown is over? Some of the foreign airlines have commercialised it, even though those approvals come from their foreign missions.”

Booking a flight

One of our correspondents who posed as a businessman, reached out to a travel service firm, Etam Avitat Services Limited, on the availability of flights to the UK.

He was immediately informed that a flight would be available for 2.45 pm on Saturday at a cost of $4, 500 and subsequently sent a Guaranty Trust Bank account number.

Our correspondent was informed that a negative COVID-19 test result would suffice but it was not compulsory.

Some other travel agencies organising such flights include April Travels Limited and www.Wontra.com which offers economy, premium economy and business class services.

Two travel agencies, Global Links and Services Limited and FlyBoku, confirmed to one of our correspondents on Friday that they were conducting evacuation (commercial) flights to London and South Africa respectively in separate inquiries.

An official of the Global Links and Services Limited told one of our correspondents on Friday that the Lagos to London flight was scheduled for August 2 and it was a charter flight with the economy and business classes.

She said, “On Lagos to London for Monday, let me make some inquiries and get back to you. There are some things we are trying to sort out tonight (Friday). There is economy fare at N550,000 for adults, N499,000 for children and business class for N1.1m. Just put that at the back of your mind. Let me get back to you because of this Sallah, we will need to sort out some things quickly. One thing that is sure is that we will still go.

“If we don’t go on Sunday, we will go during the week by next week (this week). If you don’t hear from me on Friday, you will hear from me tomorrow (Saturday). Almost everything has been put in place. It is just because of the public holiday but let me just get back to you.

“For Lagos to London flight, you will not need the COVID-19 result but why we are asking for it is for the safety of the rest of the passengers.”

Meanwhile, the official at FlyBoku, said, “The one we did (on July 31) was from Johannesburg to Lagos. For now, we don’t have Lagos to Johannesburg.”

On the Fly Boku flyer obtained by our correspondent, the fare charged for South Africa to Lagos was $1,250.

NCAA begins investigation

When contacted to speak on what the Nigerian Civil Aviation Authority was doing to sanction errant private jet owners and foreign airlines contravening the international flight ban of the Federal Government, the NCAA said it would investigate the matter.

The agency’s spokesperson, Sam Adurogboye, requested for some of the adverts on such international flights and after receiving them, he promised to forward them to the appropriate directorate for further investigation.

“Thanks for this. It will help our investigation. I will give you feedback thereafter,” he told one of our correspondents.

The Director, Public Relations, Federal Ministry of Aviation, James Odaudu, said the ministry was not aware of such incidents at the moment.

“As far as the Federal Ministry of Aviation is concerned, there are only two categories of flights that are allowed internationally into and out of Nigeria. And they include evacuation flights or those on essential services,” he stated.

He, however, noted that the government would not hesitate to sanction any airline found culpable of breaching federal directives as regards international flight operations.

Meanwhile, towards the end of March this year, the Federal Government slammed an N1m fine on a British charter carrier, FlairJet, for violating some sections of Nigeria’s Civil Aviation Regulations.

The Minister of Aviation, Hadi Sirika, said the carrier was also reported to stipulated authorities in the United Kingdom.

The Legacy 600 aircraft belonging to FlairJet with registration G-ERFX was impounded by the Federal Government at the Murtala Muhammed International Airport in Lagos for conducting out commercial flight operations despite the ban on such flights in Nigeria.

After impounding the aircraft, the Federal Government quarantined the pilots and other crew members for 14 days, and declared that all necessary sanctions against the British aviation company would be applied to the fullest.

Travel agents selling flight tickets to survive says ex-NANTA president

Commenting on the development, the immediate past President, National Association of Nigerian Travel Agencies, Bernard Bankole, said most travel agents had been out of business for about five months.

Bankole also argued that there was nothing absolutely wrong with the actions of agents who sell tickets for such flights.

He said, “When you are very hungry, if they give you garri, it becomes a suitable food, forget about the ban on international flights.

“For how long are we going to continue like this? Five months and counting, people have been out of business. This is the situation on the ground.”

He said when approvals for such flights come from the Federal Ministry of Aviation after communication with the foreign affairs ministry, people use the opportunity to move passengers into or out of Nigeria, all in a bid to survive.

Bankole insisted that the situation on the ground warranted what was happening, adding that until international flights resume, operators in the downstream aviation sector would continue to seek measures to stay alive.

Charter airlines can operate private charter flights abroad — CEO

The chief executive officer of the local charter airline, who spoke on condition of anonymity, argued if people had to pay for evacuation flights, then the flights could be commercialised after meeting the government requirements.

He said, “These are chartered flights. Although international flights have been banned, you can always arrange group charters. That is what they are doing now. This means that they can get special flight permits for one flight and they will sell off all the seats in both directions.

“The airspace is open and international flights have not yet been opened. The government can, however, allow international flights. They call them evacuation flights. Either way, you look at it, it is commercial because the people have to pay money.

“But as evacuation flights, the charters have to fulfil some requirements from the government. Technically, it is only scheduled international flights that are banned. Both for domestic and international flights, chartered flights can operate. What that means is that you can apply to the minister to get clearance after which you can operate your flights. That is how it is done.”

Some Nigerians travel after clearance from three govt ministries – Pilot

A pilot with one of the airlines, who spoke on condition of anonymity, said the charter airlines are often patronised by Nigerians who prefer less crowded planes because of the fear of the COVID-19 pandemic.

The pilot, who also does charter business, noted that although the country’s airspace was closed for international commercial flights, most of the rich Nigerians who were travelling abroad on their private jets or chartered aircraft had got clearance from the Ministry of Foreign Affairs, Ministry of Health and Ministry of Aviation.

He said, “So yes, the airspace is closed for general commercial flights but we can call what is going on repatriation flights and private charter flights. They will advertise them and call for people to come. It is a special VIP flight. But they must have been approved by the Ministries of Aviation, Health and Foreign Affairs. The airline would be fined heavily if this is not done.

“There are flights for repatriation but if the government is not paying, I have the right to choose the flight I want. A lot of people won’t go with crowded planes.”

 

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