CBN wants power to freeze criminals’ accounts, calls for Credit Tribunal

The Central Bank of Nigeria, CBN, has requested statutory powers to freeze accounts linked to criminals in the country. The apex bank also called for the creation of a credit tribunal to strengthen credit recovery processes and enforcement of collateral rights.

These positions were advanced, in Abuja, yesterday, at the senate committee’s public hearing on its Bill for an Act to Repeal the Banks and Other Financial Institutions Act (BOFIA) 2004 and re-enact the Banks and Other Financial Institutions Act 2020.

Kofo Salam-Alada, CBN’s director legal services, in his presentation, told the lawmakers that the 2004 BOFIA provided for the CBN governor “to apply to the court for orders to freeze accounts, which are deemed to be linked with criminal and other civil infractions.” He noted, however, that in the new bill, which has passed through the First and Second Readings, that provision was omitted, entirely.

“This omission,erodes the powers of the CBN and creates a huge gap in the regulatory and resolution framework. Therefore, we propose that the extant provisions should be reinstated,” Mr. Salam-Alada said.

On the creation of credit tribunal, the director defended the position of the CBN, as according to him, such a tribunal would greatly enhance loan recovery in the nation’s banking industry.

“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,” the director said.

On dormant accounts in banks, the CBN called for the inclusion of provisions to improve the administration of such accounts, adding that “such 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.”

The apex bank called for inclusion in the bill, statutory powers of the CBN to intervene in the process of managing a failing bank and bringing it back to sound financial health, were possible. The CBN urged a review of framework for managing failing institutions in line with international standards to properly delineate roles for the agency tasked with managing failing banks and other financial institutions and those with responsibility for resolving banks and other financial institutions whose licenses have been revoked.

Salam-Alada said: “In other words, the Central Bank of Nigeria does the former as provided in the BOFIA, while NDIC is saddled with the latter under the NDIC Act. The global best practice is to have the banking legislation empower the financial services industry regulator to regulate banks, promote their soundness and stability, superintend issuance and revocation of operating licence without recourse to any other institution.