The Central Bank of Nigeria (CBN) Wednesday demanded statutory powers from the Nigerian Senate to enable freeze bank accounts that are linked to criminal suspects.
This demand was made on behalf of CBN by the Director, Legal Services, Mr Kofo Salam-Alade, who appeared before a Senate Committee Hearing for a new Act seeking to replace the Banks and Other Financial Institutions Act (BOFIA) of 2004.
The lawmakers have commenced the process of repealing/replacing BOFIA 2004 with the re-enactment of BOFIA 2020. However, a particular omission in the new bill has the CBN worried.
In his presentation to the committee, Salam-Alada pointed out that the new BOFIA bill has ‘inadvertently’ omitted a clause that should normally grant the CBN Governor the power to freeze any bank accounts linked to criminals, subject court order.
In 2004, the BOFIA Act had contained this clause. However, the new bill seeking to re-enact BOFIA does not have it. Interestingly, this new bill has passed its second reading at the senate, meaning that it could soon become law.
According to Salam-Alade, the clause should be re-introduced into the new BOFIA bill in order not to frustrate the CBN’s fight against fraud and other financial crimes.
“This 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,” Salam-Alada argued.
Also, the CBN director called on the lawmakers to consider the creation of a credit tribunal saddled with the responsibility of addressing persistent issue of non-performing loans in the banking sector.
Salam-Alada explained that such tribunal will fast-track the recovery of loans from banks and other financial institutions through the enforcement of rights over collaterals.
“As part of measures to address the role of nonperforming 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 and enforcement of rights over collateral securities.
“Several new types of licensed institutions have entered the Nigerian financial services sector since the enactment of the 1991 Act. These include the non-interest banks, credit bureaux, payment system service providers, among others. There is a compelling need to introduce new provisions in the bill to address the unique peculiarities of these institutions”, he said.
As a matter of importance to the Apex bank, Salam-Alade also raised the issue of intervention, pointing to the committee the omission of power granted the CBN to intervene and rescue a failing bank in the new BOFIA bill.
