The Central Bank of Nigeria (CBN) has approached the Senate to grant it powers to freeze accounts linked to crime suspects.
The CBN made the appeal on Wednesday at a Senate Committee public hearing on its Bill for an Act to repeal the Banks and Other Financial Institutions Act (BOFIA) 2004 and re-enact the Banks and Other Financial Institutions Act 2020.
The CBN, represented at the hearing by the Director Legal Services Mr. Kofo Salam-Alada, proposed to the Senate to reinstate the powers of the CBN Governor “to apply to the court for orders to freeze accounts which are deemed to be linked with criminal and other civil infractions.” He lamented that this power was omitted in the Bill.
The apex bank also wants legislation for the Creation of Credit Tribunal to address the issue of non-performing loans.
Salam-Alada said: “As part of measures to address the role of non-performing loans, we propose the creation of a Credit Tribunal. The objective is to create an efficient regime for the recovery of eligible loans of banks and Other Financial Institutions (OFls) and enforcement of rights over collateral securities.”
He said the powers of the CBN to intervene in the process of managing a failing bank and reinstatement of a bank in a grave situation and bring it back to sound financial health was omitted in the Bill.
The omission, he told the Senate, “erodes the powers of the CBN and creates a huge gap in the regulatory and resolution framework. Therefore, we propose that the extant provisions should be reinstated.”
On the administration of dormant accounts in deposit money banks (DMBs), the CBN is asking for the “inclusion of provisions to improve the administration of dormant accounts in the Nigerian banking sector.”
The provisions, Salam-Alada said, “should address such requirements as the criteria for determining dormancy, the processes for managing the funds in dormant accounts and procedure for reclaiming funds by beneficiaries.”
Addressing the Senate Committee also, the Managing Director, Nigeria Deposit Insurance Corporation (NDIC) Alhaji Ibrahim Umar said the Bill for a repeal of BOFI Act and its re-enactment by the committee on banking, insurance and other financial institutions was an appropriate step to take in the face of current challenge facing the economy.
“A lot has happened since 2004 to the banking sector. A lot has been put in place to make it efficient, a lot has taken place by way of introducing new products, agent banking; mobile banking. All these speak to the need to have a harder look at BOFIA,” he said.
Going forward, the NDIC and CBN he said are partners working for an efficient and healthy banking system. “We agree to disagree with CBN on certain issues. The two institutions have come a long way on shared responsibilities,” he said.
In his presentation, NDIC’s Director, Legal Department Mr. Bellema Taribo, sought the Senate’s support to recognize NDIC along with CBN as co-regulators since NDIC is already a co-supervisor of banks with the CBN.
He pleaded to the Senate for legislation to tackle insider abuse dealings in banks. He dismissed the clamour for the appointment of another liquidator for banks insisting that the NDIC is the sole liquidator of banks.
According to him, “NDIC is the sole liquidator of banks. The issue of appointing another liquidator should never arise. We need to look at that in the re-enacted BOFI Act.”
Earlier in his opening remarks, Senate President, Ahmed Lawan, who was represented by the Deputy Senate Leader, Robert Ajayi Boroffice assured stakeholders at the hearing that their inputs will not only be absorbed but will form the major ingredients that will be used to produce the new laws.
On his part, the Chairman, Senate Committee on Banking, Insurance and other Financial Institutions, Uba Sani said the bills were critical to the economic stabilization of the economy. He said the BOFIA review was long overdue, adding that it will prevent future bank distress and tackle sharp practices.
Also speaking, the co-sponsor of BOFIA, Betty Apiafi said the value of financial technology will be reflected in the bill, as it will help reduce NPLs. “It will also help watchlist chronic defaulters who are responsible for the NPLs. It’s a big problem of the financial institutions,” she said.