The Central Bank of Nigeria (CBN) and Nigeria Deposit Insurance Corporation (NDIC) presented opposing recommendations to the Senate on the ongoing ...
The Central Bank of Nigeria and Nigeria Deposit Insurance Corporation presented opposing recommendations to the Senate on the ongoing amendment to the Banks and Other Financial Institutions Act . The NDIC is seeking more powers to aside insuring depositors’ funds, participate in the licensing of banks.
The Bill, sponsored by Senators Uba Sani and Betty Apiafi had earlier passed through first and second reading on the floor of the Senate following which it was passed to the Committee on Banking, Insurance and Other Financial Institutions for further legislative action. The public hearing attracted a diverse group of critical stakeholders within the financial services sector, in addition to other relevant public interest groups.
Review of 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institutions and those with responsibility for resolving banks and other financial institutions whose license have been revoked. In other words, the Central Bank of Nigeria does the former as provided in the BOFIA while NDIC is saddled with the later under the NDIC Act.
He also expressed the need for the Corporation to be involved in the process of licensing banks in collaboration with the CBN in order to ensure the necessary fit and proper checks and to establish clearer assessment of the status of financial institutions before licensing. The former CIBN boss wanted to know while the NDIC wanted to take more functions, instead of perfecting the ones already assigned to it. “There should be a court ruling confirming that a bank has failed, before liquidation begins. That process is very slow, and that’s where I want the NDIC to look into. There is one that I am involved in that has taken years and that does not give confidence to depositors,” Unegbu said.
“There is no need for the NDIC to be involved in some of the issues it is advocating for, like licensing of banks and regulating banks. We should draw the line. Once a bank or other financial institution goes down, it will be time for NDIC to step in. But what ever regulation that is needed before that time, should be provided by the CBN. Anything outside this, will create regulatory confusion, and duplication of roles that will left many things undone,” he said.
He said: “The CBN has commitment with banking sector issues of regulation, licensing and stability while NDIC is purely on deposit insurance. However, on issues around getting CBN’s approval to carry out certain functions, my thought is that the apex bank can just be notified. And if it comes that there must be an approval from the CBN, the new law can specify the exact timeframe under which the CBN should approve or decline the request”.
The Corporation noted that there is no need for approval of the Central Bank to be sought in the implementation of supervision, control and management and distress resolution of banks as reflected in the Bill as this constitutes the core mandates of the Corporation.
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