House of Representatives Committee on Banking and Currency has expressed its displeasure over deposit banks which give loans to directors and relatives above the stipulated threshold in the Bank and Other Financial Institutions Act (BOFIA).
Chairman of the Committee, Rep. Jones Onyereri (Imo-PDP) expressed the concern during a public hearing on a Bill to amend the BOFI Act in Abuja on Monday.
The Bill also seeks to establish a Deposit Fund at the Central Bank of Nigeria (CBN) for standardisation and management of dormant accounts in accordance with international best practices.
“I am worried to the extent that if you look at the BOFI Act amendment bill, you will agree with me that most banks create unnecessary infractions.
“How will you ask a bank to pay N100, 000 for an infraction; that is why the bank can afford to give themselves billions of credit facility at the expense of the depositors.
“With respect to the regulators, there is nothing weighty about the consequences of not doing your job as it were.
“Why do you have the Banking Supervision Department.
“You know that the law provides that no shareholder or bank director will give credit to himself or anybody whosoever related to him or her in excess of N50, 000.
“But you are giving billions of naira. CBN knows that no bank has the authority to give any loan whatsoever without the express approval of the CBN and you allow that to happen.
“So the time has come to take critical look at the BOFI Act and in the next two to three months, we will come out with the amendment,’’ Onyeriri said.
He said that imposition of stringent penalty on defaulting officials would serve as deterrent to others.
“A penalty of about N20 million on defaulting CBN Governor or the Director, Banking Supervisory Department or N50 million on the auditor who fails to bring to fore such infractions in the cause of discharging his responsibility.
“This will also forestall the collapse of the financial sector of the Nigerian economy, the lawmaker said.
Speaking on the intent of the BOFI Act amendment bill on dormant accounts, Mr Belema Taribo, Board Secretary, Nigerian Insurance Deposit Corporation (NDIC) urged the House to cede the management of the dormant account to the corporation.
Taribo assured that the fund would be invested in government securities as provided in the NDIC Act.
He called for the redraft of the unclaimed funds to include drafts or any instruments not yet presented for payment by beneficiaries or funds received from any person without sufficient details as to the rightful beneficiary.
Taribo alleged that the insider abuse was negatively affecting the banking industry.
According to him, there are several dormant accounts belonging to government agencies and parastatals due to the introduction of the Treasury Single Account (TSA).
Taribo explained that all the accounts under litigation would not be included in the pool of fund to be managed.
He called for inclusion of dormant accounts of government agencies in the bill. (NAN)
IK/MO