Central Bank of Nigeria Headquarters in Abuja, FCT

CBN seeks exclusive rights to license banks

*Proposed act to enable CBN serve its purpose of identifying critical roles played in banking regulations

Isola Moses | ConsumerConnect

The Central Bank of Nigeria (CBN) has urged the Senate Committee on Banking, Insurance and other Financial Institutions to grant it exclusive rights to issue licences to banks and revoke them.

It was learnt that Mr. Godwin Emefiele, Governor of CBN, said that licensing of banks and revocation of the same when a bank goes distressed would place the country on par with the international practices and minimise duplication of functions in the economy.

The proposed act will help the Central Bank of Nigeria to serve its purpose better by being able to identify the critical roles it plays in regulating the banks, according to Emefiele.

The Bankers’ Bank has proposed that the banking legislation should empower the CBN to issue and revoke operating licences to banks while regulating them, according to Verdict UK.

The Nigeria Deposit Insurance Corporation (NDIC) should be in charge of bank resolution activities after a licence is revoked, he CBN Governor said.

Report further stated that Emefiele noted the new amendments should consider “the enhancement of failing bank recovery and resolution tool kit to give more options for managing failing institutions and systemic crisis without recourse to the public treasury; the creation of a credit tribunal to strengthen credit recovery processes and enforcement of collateral rights.

Others are strengthening the framework for reporting for insider transactions as part of measures to boost credit administration processes in banks; enhancements to regulatory measures for single obligor limits, transfer of significant holdings, etc. and strengthening of the sanctions regime to make it more deterrent.”

The governor also proposed to review and recognise the unique business models of new entrants, including non-banks into the financial services industry and a pool of several other amendments.

Alhaji Ibrahim Umaru, Managing Director of the Nigeria Deposit Insurance Corporation (NDIC), in his contribution said that “it was important that the CBN is involved in the process of licensing new banks.”

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