A new bill to replace the Banks and Other Financial Institutions Act (BOFIA) of 2004 has reportedly passed second reading, meaning that it could soon become law. And such a likelihood is giving the...
A new bill to replace the Banks and Other Financial Institutions Act of 2004 has reportedly passed second reading, meaning that it could soon become law. And such a likelihood is giving the top management staff of the CBN sleepless nights, vis-à-vis what they consider “omitted provisions.
Data published by the Asset Management Corporation of Nigeria — the ‘toxic loans bank’ — clearly reveal that the total amount of non-performing assets is about equal to the Federal Government’s annual budget. They also reveal that less than 15 per cent of the total number of borrowers are responsible for the messy situation.
If it is true that the powers of the CBN to intervene in the process of reviving a financially distressed bank were omitted in the bill under consideration, it portends grave consequences for the stability of the banking and financial sector, and the omitted extant provisions should be reinstated — but with a vital caveat.
The CBN is already imbued with enormous powers to conduct monetary policy by virtue of both the Amended BOFIA and the 2012 CBN Act. Any additional powers would make it operate like a state within a state. English historian and politician Lord John Acton succinctly put in this manner: “Power tends to corrupt, and absolute power corrupts absolutely.”
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