The Senate Committee on Banking, Insurance and Other Financial Institutions has said that the Nigeria Economic Summit Group NESG lacks the moral right to remark on amendment to the Bank and Other Financial Institutions Act 2020 (BOFIA) recently ratified by the National Assembly.
Recalled that, NESG has expressed concerns over certain provisions of the ‘BOFIA 2020 Amendment and requested the President to withhold assent until the bill is “properly reviewed, amended and made fit for purpose.”
In a sharp reaction, Senator Uba Sani, chairman of the Senate Committee on Banking, Insurance and Other Financial Institutions described NESG’s critique as a shock and disappointment.
He challenged the competence of the NESG which as one of the key stakeholder groups that were expected to take a critical look at the repealed and re-enacted bill failed to do so.
“The National Assembly subjected the bill to public hearing. Stakeholders made written submissions and were present at the National Assembly to canvass and defend their positions.
“The Senate Committee received a total of 32 memoranda. Some of the key stakeholders that made written and oral submissions are: Central Bank of Nigeria (CBN), Nigeria Deposit Insurance Corporation (NDIC), Federal Ministry of Finance, Development Bank of Nigeria (DBN), Money Deposit Banks, Infrastructure Bank, Bank of Agriculture, Chartered Institute of Bankers of Nigeria, Institute of Chartered Accountants of Nigeria, Association of National Accountants of Nigeria, Securities and Exchange Commission (SEC), Association of Bureau De Change, Corporate Affairs Commission (CAC), National Union of Banks, Insurance and Financial Institutions Employees (NUBIFE), Nigeria Security Printing and Minting Company, Nigeria Labour Congress/Trade Union Congress, FINTECH Development & Advocacy Initiative, Association of Senior Staff of Banks, Insurance and Financial Institutions, Access Bank PLC, Ministry of Communications and Digital Economy, and Finance Correspondents Association of Nigeria (FICAN),” Uba Sani enumerated.
He explained that committees of both houses distilled the positions of stakeholders, addressed their key concerns and incorporated their inputs before submitting final reports to the Senate and House of Representatives.
“It therefore beats our imagination that the leadership of NESG that failed its members by refusing to attend a very important public hearing can just wake up from their slumber and condemn a bill that was painstakingly put together and passed by the National Assembly. It is also clear to us that the leadership of NESG has not read the bill.
“They are just acting on hearsay. They may have just picked up some gossips from individuals bent on shooting down the bill for their own selfish or collective interests. The bill did not confer immunity on the Central Bank of Nigeria (CBN) officials. It does not exempt actions by the CBN from judicial review,” Uba Sani said.
He said the specific provision of BOFIA 2020 that NESG may have been told confers immunity on CBN is Section 12 (6) states that: Notwithstanding the provisions of this Act or any other enactment, no restorative or like order howsoever described, shall be granted against the Bank or the Governor in any action, suit or proceedings in relation to the revocation of a licence by the Bank under this Act, and the remedy of any claimant or applicant against the Bank or the Governor in any such action, suit or proceedings is limited to monetary compensation not exceeding the equivalent of the value of the paid-up capital of the bank at the time of the revocation of its licence.
“This is a new clause, not contained in the existing BOFIA law. The limits of the redress that can be sought/obtained in the event of a challenge of a revocation of a bank’s license was not provided for in the repealed law. The proviso does not state that the CBN Governor is immune from being sued in the case of revocation of a bank’s license.
“However, the proviso restricts the limits of the claims that can be made against the CBN to monetary claims which is subject to the paid-up share capital of the bank at the time of the license revocation. It is important to note that the new law does not give the CBN Governor leeway alone in the revocation of a bank’s license.
“For the benefit of NESG and other groups that may have mischief up their sleeves, BOFIA 2020 contains 130 clauses. NESG failed to quote even one clause. The bill which has broken new grounds seeks to update the laws governing Banks, Financial Institutions and Financial Services; enhance efficiency in the process of obtaining and/or granting of banking licenses; impose stiffer penalties for regulatory breaches in the financial services industry and also regulate the activities of Financial Technology Companies (FINTECHs). Some of the key innovations in BOFIA 2020 are as follows:
“Regulation of banks is now in line with global best practices with regulation tools such as: AML/CFT (Anti-Money Laundering/Combating the Financing of Terrorism); Corporate Governance; Risk Based Capital requirements etc. (Clauses 66 – 73)
“With the creation of the Resolution Fund, which will be funded annually by CBN and the banks and managed by the CBN, the bill seeks to minimize recourse to public funds for resolution of crisis in the banking sector and failing or failed banks i.e. opting for the BAIL-IN option as against the BAIL-OUT option. (Clause 94)
“The bill introduced the licensing and regulation of financial services providers (FINTECHs) that operate digitally, electronically or virtually. The bill aims to sanitize their operations and drive investments in that space, and also to support their innovative initiatives. (Clause 57)
“There are stricter regulations on insider lending, which has been observed to be a major reason for bank failures in the country. The limit for unreported insider lending was reduced from N3m to N1m. (Clause 3),” he explained.
According to him, BOFIA 2020 also addresses the issue of dormant accounts in the banking sector to stem losses from charges etc. on such accounts as well as secure the funds in dormant accounts. (Clause 74).
“In line with global best practices, Cyber-Security regulations have also been included in the new bill to address the issues related with cyber-security in delivery of services by banks. This was necessitated by the major shift from traditional banking practices of physical presence banking to online platforms in practically all banks in the country and the dependence of banks on computerized systems for record keeping (Clause 68)
“A consumer protection clause was also included in the bill. This allows the CBN determine consumer protection policies of banks to ensure that consumers of banking products and services in Nigeria are protected at all times (Clause 30)
“The CBN has been granted powers to freeze accounts deemed fraudulent or terrorist related etc., with a valid court order obtained from the Federal High Court by the CBN Governor. (Clause 97)
“The new bill allows banks to invest in venture capital which has proved to be a major driver of development and innovation across the world. (Clause 20), Senator Uba. said.
Banks he said, will be less prone to breaking regulations and sharp practices, with the upward review of fines/penalties for regulatory breaches:”The bill has a provision to create a Credit Tribunal where loan related matters can be heard and resolved expeditiously. Lengthy loan dispute resolution issues have also been traced to be causes of bank failures. Also this will speed up the loan dispute resolution cases in AMCON as this has proved to be a very lengthy process in conventional courts.
“BOFIA 2020 promises to reinvent and re-energize the financial sector in Nigeria. Stakeholders are excited and looking forward to the Presidential assent to the bill. We are therefore left to wonder where NESG is coming from.
“We hope they are not being used by some forces to undermine efforts being made to stabilize the financial sector and reposition the economy in this challenging period.
“If the group means well for the country, it is advised to drop its ill-conceived campaign against Presidential assent to the bill. It may wish to consult members of the National Assembly for an Amendment Bill. This is time for stakeholders to work cooperatively in the interest of the Nigerian people,” Uba Sani explained. ENDs