Finance Tips

THE N420 BILLION NIGERIA BANK STIMULUS: Some Economic and Financial Implications

Written By: Shafii Ndanusa MBA, ACCA, FAAFM

Nigeria and in fact the entire world economy has in the last five weeks witnessed the spectacle of the unfolding drama in the nations’ banking and financial landscape. A major stabilizing decision that was taken in the wake of the Central Bank of Nigeria’s intervention is the injection of some four hundred and twenty (420) billion Naira into the five hitherto unhealthy commercial banks. This rather humane and socially-responsible action itself has elicited a wide range of reactions from a cross section of the populace. Although, there appears to be some balance of reporting in terms of those who favor and those who oppose the CBN intervention. My personal view is that Nigeria is a developing country. More than ever before, this is the time Nigerians should pay great attention to facts, truth and objectivity. Based on the above criteria, people should then decide where to pitch their tents in matters of critical national importance. The era of primitive sentimentality, blind accusations and ill-informed contemplation clearly belongs to the dustbin of history.

My favored approach to a lot of issues is to ask questions myself. Perhaps this is because of my willingness and openness to new perspectives of thought and action. To this end, the following is considered pertinent.

1. How is the 420 billion Naira stimulus package being made available to banks? Is it solely in cash or a combination of cash and financial instruments? Note that attention has to be paid to the impact of cash injection to the overall money supply of the Nigerian economy and its attendant effects on interest rates. Continue reading ‘The N420 billion Nigeria Bank Stimulus: Some Economic and Financial Implications’ »

UK savers were badly hit in the worst of the recession, as base rates continued to fall to their lowest level in history – 0.5%, the rate at which they still remain, marking the sixth month in a row.

This caused the UK savings market to crash, forcing those that once lived off their interest returns to to dip into their capital.

However, the low rates mean that home-owners with tracker mortgages would have seen repayments plummet, leaving them with more disposable income.

Although the Bank of England base rate remains at a record low, the savings account market has been kick-started, allowing savers to earn up to 5% – 10 X the current base rate, depending on the savings product they choose. Continue reading ‘Fixed rate bonds and saving market 'recovering from recession'’ »

I was reviewing our logs and noticed that someone had come to Jumbo CDs, looking for the answer to, “What is the difference between FDIC and NCUA Insured?”

Boy, did I feel silly because I didn’t actually have the answer on our site. After all, it is an important question for people investing their money into banks and credit union CDs.

And the answer is, there is really no difference as far as federal protection. Both cover your bank accounts (CDs, Savings, Checking, Money-Market) up to $250,000 through 12/31/13. If the Gov’t doesn’t extend that it will revert back to $100,000. Both cover your IRA accounts assuming they are in a bank account and not a securities account up to $250,000. That was a permanent change made in 2004. IRAs are insured separately then your regular bank accounts. Continue reading ‘Are There Differences between the NCUA and FDIC?’ »

Finances have always been of utmost importance and handling it with complete responsibility can be quite a task. At the end of it all, you need growth, sustainability and security for your money. When you are in a far-off land and you need to be connected with your homeland financially, then the bank you choose plays a crucial role in your wealth management. NRI Accounts in banks offer you a lot more than just parking space for your hard-earned money. They have on offer a bouquet of services including financial planning, investments, lockers, etc.

The government of India introduced the rules for holding a NRI banking account in the year 1970. Within that purview, individuals leaving their country have found great convenience in maintaining their finances. Non-resident Indians can open any of the below mentioned accounts with their Indian bank:

NRE (Non Resident External Accounts)
It is an account by way of Savings, Current or Fixed Deposits in Indian rupees. The funds in this account are fully repatriable.
NRO (Non Resident Ordinary Accounts)
This account can be opened in the form of Savings, Current or Fixed Deposits in Indian Rupees. The only difference in this account is that the funds cannot be repatriated. However, the interest accrued over the deposits and investments is repatriable.
FCNR (Foreign Currency Non Resident Accounts)
All funds in this account are easily repatriable. You can only open a Fixed Deposit with this account in five major currencies of the world. The currencies are – US Dollars, Pound Sterling (GBP) and Euro. Continue reading ‘NRI & NRO Deposit Accounts with Online Banking in India!’ »

Analysis of Indian Financial Sector reveals that it is at present going through a phase of stable growth rate which is experiencing a upward swing. The rise can be maintained over a long period by keeping the inflation down. The financial sector in India has experienced a growth rate of 8.5% per annum. The rise in the growth rate suggests the growth of the economy. The financial policies and the monetary policies are able to sustain a stable growth rate. The reforms pertaining to the monetary policies and the macro economic policies over the last few years have influenced the Indian economy to the core. The major step towards opening up of the financial market further was the nullification of the regulations restricting the growth in the financial sector. To maintain such a growth for a long term the inflation has to come down further. The analysis of Indian financial sector shows the growth of the sector was the result of the individual development of the divisions under the sector.

Analysis of the Indian Capital market

• The ratio of the transaction was increased with the share ratio and deposit system
• The removal of the pliable but ill-used forward trading mechanism
• The introduction of InfoTech systems in the National Stock Exchange (NSE) in order to cater to the various investors in different locations
• Privatization of stock exchanges

Analysis of the Indian Venture Capital market

• The venture capital sector in India is one of the most active in the financial sector in spite of the hindrances by the external set up
• Presently in India there are around 34 national and 2 international SEBI registered venture capital funds

Analysis of the Indian Banking sector

• The banking system in India is the most extensive. The total asset value of the entire banking sector in India is nearly US$ 270 billion.
• The total deposit is nearly US$ 220 billion. Banking sector in India has been transformed completely.
• Presently the latest inclusions such as Internet banking and Core banking have made banking operations more users friendly and easy. Continue reading ‘ANALYSIS OF INDIAN FINANCIAL REFORMS WITH REFERENCE TO BANKING SECTOR’ »

Offshore banking has always been surrounded with an aura of mysticism with rich and often criminal people hiding their assets on a far away island where no taxes are being paid. The media is full of stories where offshore banking and criminality are tightly associated and in the movies it is always the bad guys who are using offshore accounts. For a bad cause of course. Personally, I cannot remember one single movie where the good guys where the ones using an offshore company or an offshore bank account.

But is this a correct description of offshore banking? Is offshore banking really that bad?

The definition of offshore banking and an offshore bank

The term ‘offshore banking’ originates from Europe and the Channel Islands; a couple of islands that are situated in the English Channel between England and France. The Channel Islands were by definition ‘offshore’ from England and the rest of the United Kingdom. In the beginning the term offshore had nothing to do with taxes, it was simply a description of something that geographically was not situated on the main land of UK and an offshore bank was a bank being situated ‘offshore’ on the Channel Islands. Continue reading ‘What is offshore banking? And is it really that bad?’ »