CBN Seeks Special Court To Try Loan Defaulters

As the national assembly prepares to repeal the Banks and Other Financial Institutions Act (BOFIA) 2004 and enact a new one, BOFIA 2020, Central Bank of Nigeria (CBN) has asked for the establishment of a Credit Tribunal to address the issue of non-performing loans.

At a public hearing on Wednesday, CBN also asked for powers to freeze accounts link to criminals.

CBN Director, Legal Services, Kofo Salam-Alada, who made the submissions to the Senate committee said fraud and finance crimes would be greatly tamed when the apex bank governor is given powers to apply to the court for orders to freeze accounts which are deemed to be linked with criminal and other civil infractions.

“As part of measures to address the role of non-performing loans, we propose the creation of a Credit Tribunal.

“The overarching objective is to create an efficient regime for the recovery of eligible loans of banks and Other Financial Institutions (OFls) and enforcement of rights over collateral securities.

“Several new types of licensed institutions have entered the Nigerian Financial Services sector since the enactment of the 1991 Act.

“These include the non-interest banks, credit bureaux, payment system service providers, among others.

“There is a compelling need to introduce new provisions in the Bill to address the unique peculiarities of these institutions,” he affirmed”.

Alaska also “proposed the inclusion of provisions to improve the administration of dormant accounts in the Nigerian banking sector. The provisions should address such requirements as the criteria for determining dormancy, the processes for managing the funds in dormant accounts and procedure for reclaiming funds by beneficiaries.”

In line with international best practices we recommend the establishment of a resolution fund to pool resources for managing banking sector distress.”

Also speaking, Managing Director, Nigeria Deposit Insurance Corporation (NDIC), Mallam Umaru Ibrahim, said a lot has happened since 2004 to the banking sector by a way of introducing new products, agent banking; mobile banking. All these speak to the need to have a harder look at BOFIA.

NDIC Director, legal department, Mr Bellema Taribo, said there was a need for legislation to tackle insider abuse dealings in banks. The corporation also sought the re-enact BOFIA ACT, to recognise NDIC along with CBN as co-regulator because according to Taribo, NDIC is a co-supervisor of banks.

He dismissed push for appointing another liquidator for banks and affirmed NDIC is the sole liquidator of banks.

“NDIC is the sole liquidator of banks. The issue of appointing another liquidator never arise. We need to look at that in the re-enact BOFI Act,” he submitted.