...WANTS DIRECTORS HELD RESPONSIBLE FOR BANK FAILURES
The Nigeria Deposit Insurance Corporation (NDIC) has urged the National Assembly to prohibit and make criminal offence insider loans by banks.
The Managing Director and Chief Executive of NDIC, Umaru Ibrahim, made this request in a presentation to the Senate Committee on Banking, Insurance and Other Financial Institutions during a Public Hearing for the Amendment of the BOFIA Act 2004.
The amendment seeks to repeal the BOFIA Act 2004 and re-enact the Bill for BOFIA 2020.
The NDIC MD said, “We want insider loans prohibited and criminalised by making it an offence punishable with imprisonment and fine for directors of licensed banks to obtain credit facilities from their own banks, whether such credit facilities are secured or not.”
The NDIC boss also canvassed that directors of banks should be held personally liable without any limitation for the causes of the failure of their banks where they have been found to be negligent in managing the bank.
“The imposition of penalties and prosecution of various offences to serve as a deterrent to officers and directors of banks. This will ensure that the banking industry complies with available laws and regulation in order to avoid paying stiff penalties,” he added.
He told the panel that there was no need for the NDIC to seek the approval of the Central Bank of Nigeria 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.
The Corporation, he stated, should carry out these functions in consultation with the CBN not with the consent of CBN as both institutions are independent and complement the functions.
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 a clearer assessment of the status of financial institutions before licensing.
He also noted that the bill seems to suggest the option of the appointment of other entities in the liquidation of failed banks adding that the Bill should be amended to reflect the NDIC as the sole liquidator of failed banks based on the Corporation’s core mandate of Bank Liquidation.
He called for clear delineation of roles between the NDIC and CBN in order to strengthen the legal framework and contribute towards effective and efficient collaboration in the supervision and regulation of the Banking Sector.
BADEJO ADEMUYIWA has 23 years experience as a Finance Writer, specialising in Insurance and Investigative Reporting.