An average bank customer assumes that banks have all the funds they have received from customers in their custody. The air of affluence displayed by banks could make you assume that receiving your funds back when needed, would not be a problem. At least, that was assumed until Godwin Emefiele happened to Nigeria. What hypocrisy cannot destroy does not exist.
I once did a study showing that the difference between Nigerian banks and the MMM Ponzi scheme is that the former is licensed, which bequeathes to it the ‘trust’ value that enables citizens believe (without evidence) that they can trade with it, while the latter does not have that luxury. However in principle, both are largely the same; collect money from a lot of people and use daily collections to service daily demands from withdrawals.
Just as customers have besieged commercial banks to demand for their funds, one would expect the Nigerian banks to be demanding their funds in the custody of the CBN, to enable them meet their clients demands. However, the truth is that these monies are more often not there. What the banks survive on is the silence of the banking regulators as along as the banks meet their minimum requirements.
I tell you that if customers are to request for a refund of their monies, no bank would be able to meet such demands. The answer is in the fact that the CBN licenses trust/guarantees, that allows the banks to keep operating but technically without the physical funds to evidence what they have collected from customers. Each year, banks take huge amounts of customers funds as profits but in reality, such profits are really not evidencing productivity.
I hope Emefiele and Muhammadu Buhari understand that they have technically crippled the Nigerian economy. What was keeping the MMM-like banking system in Nigeria was the trust value of the CBN and just as the Mavrodi created Ponzi scheme failed due to trust issues, a whole lot of Nigerian banks will not be able to survive the stress test of CBN’s failure to manage the economy.
So, in simple terms, the banks are in serious trouble now.