Etim Effiong
The Central Bank of Nigeria is seeking statutory powers to
freeze accounts that are operated by criminals.
The bank also seeks the creation of a Credit Tribunal with a view
to strengthening credit recovery processes and enforcement of
collateral rights.
The proposition was made at the 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.
CBN’s Director, Legal Services, Mr Kofo Salam-Alada, told the lawmakers
that the 2004 BOFIA provided for 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.’
Salam-Alada stated that in the new Bill, which has passed First and
Second Readings, the provision was omitted, entirely.
He said, “The omission 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.”
Concerning the creation of Credit Tribunal, the director defended the
position of the CBN, saying that such a tribunal would enhance loan recovery in the Nigeria’s banking industry.
“As part of measures to address the role of non-performing loans, we
propose the creation of a Credit Tribunal. The overarching 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.
About the dormant accounts in banks, the CBN called for the inclusion
of provisions to improve the administration of such accounts, adding,
“such provisions 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.”
He said the inclusion of the clause in the bill, will give the CBN statutory powers to intervene in the process of managing a failing bank and bringing it back to sound financial health, where possible.
The CBN called for a review of the framework for managing failing
institutions in line with international standards to properly
delineate roles for the agency tasked with managing failing banks and
other financial institutions and those with responsibility for
resolving banks and other financial institutions, whose licence has
been revoked.