70% Of Bankable Adults Keep Money Away From Banks – Centre For Finance, Law & Policy

Citing corruption, instability and distrust within the banking system, 70 percent of bankable adults in the country still preferred to keep their money away from the banks, a report sponsored by the Centre for Finance, Law and Policy (CFLP), Boston University has stated.

The study, which centered on “Consumer Perceptions and Saving Behaviour” of Nigerians in the aftermath of the 2009 audit of commercial banks by the Central Bank of Nigeria (CBN), stated that respondents were more concerned about banks’ reputation and stability as determining factors in their choice of banking.

The 2009 audit had among other things, revealed a third of the existing 24 commercial banks were critically insolvent.

Authors of the report-Assistant Professor of Economics, Boston University, Kehinde Ajayi and Researcher, African Studies Center, Boston University, Dr. Omale Ali Garba said the objective of the study was to understand what factors influence people’s disposition to using the formal banking system for financial services.

Ajayi said although the Nigeria Deposit Insurance Corporation (NDIC) claimed the Central Bank of Nigeria (CBN) had sufficient information about the banks on its website for people to access the information relating to the health of financial institutions, most Nigerians still don’t have access to these critical information.

“We also made the point that some people in the villages don’t have access to the Internet and so can’t go online to look for such information about the banks,” she told THISDAY at a workshop in Abuja.

The report further said there was lack of information on how the banks are doing.

Ajayi said: “A key message for the regulators is the fact that people are not aware, even though they’ve been doing a lot to make the information available, by publishing it on the websites…most people are not aware they could go and find out about how their banks are doing.”

She said: “They should think about sharing that information more widely, encouraging people to be financially literate because banks are competing for consumers and should know that if they are not behaving well, the costumes would go somewhere else, and so they will try to behave in a more responsible manner.

“People care about stability but they don’t have access to the information. Most people also say the reason they don’t have a bank account is that they don’t have money; because they don’t have regular income.

But at the same time, a lot of people say they’re saving money which means they must have money they are choosing not to put in the banking system. I think it’s a combination of people having enough money…increasing level of income reduce poverty when people have more money, then they’ll be more willing to put in the banks.”

Participants further raised concerns over what they termed as excessive bank charges which had discouraged individuals from patronising the banking system while others chided the banks for putting out complex requirements for owning a bank account.

A participant said the banks often deceived customers into signing documents which they only know their implications only after it’s rather too late-giving the banks leeway to fleece their customers.

Among other things, the report called for increased financial interest and literacy in order to increase trust in banks and reduce the negative consequences following a financial crisis.

It said regular information about bank stability and practices would increase consumer welfare and incentivize banks to maintain integrity in order to retain customers.

It added that poverty reduction was likely to increase as more people develop a stronger ability to save in banks.

Source:- Thisdaylive