BY ONYEKA AJUMOBI ONOCHIE
The Central Bank of Nigeria (CBN) has urged the Senate Committee on Banking, Insurance and Other Financial Institutions to grant it powers to issue and revoke licenses of banks in line with international best practices, thus minimizing duplication of functions that has been the bane of several Nigeria’s agencies.
The bank’s governor, Mr. Godwin Emefiele, stated this at a public hearing on the amendment of Banks and Other Financial Institutions Act 2004(Repeal and Re-enactment Bill, (BOFIA) 2020 at the National Assembly, Abuja, on Thursday.
Emefiele said his canvassed position will go a long way in supporting the apex bank to continue to play its critical and traditional role of regulating the banks, knowing when things go wrong in their operations, take necessary measures to correct them and then apply the requisite big stick when required.
While the apex bank should be left with its traditional role of issuing and revoking banks’ licences, the CBN Governor proposed that the Nigeria Deposit Insurance Corporation (NDIC) should, rather, continue to be in charge of bank resolution activities after a licence is revoked.
Emefiele said that the new amendments should consider the Enhancement of failing bank recovery and resolution tool kit to give more options for managing failing institutions and systemic crisis without recourse to the public treasury, in addition to the creation of a credit tribunal to strengthen credit recovery processes and enforcement of collateral rights.
“There should also be strengthening the framework for reporting for insider transactions as part of measures to boost credit administration processes in banks; enhancements to regulatory measures for single obligor limits, transfer of significant holdings, etc. and strengthening of the sanctions regime to make it more deterrent,” he further proposed.
The governor also proposed to review and recognise the unique business models of new entrants, including non-banks into the financial services industry and a pool of several other amendments.
On his own, the NDIC Managing Director/CEO, Umar Ibrahim, proposed for the variances in the Bills that may be perceived as overlapping mandates between the NDIC and the CBN to be clarified in order to avoid any ambiguity in the laws governing their operations and should be reflected in the BOFIA 2020.