THE Central Bank of Nigeria is demanding the creation of a special court, to be known as Credit Tribunal, to address the issue of non-performing loans in the banking sector.
The CBN made the appeal on Wednesday to members of the Senate Committee on Banking, Insurance and Other Financial Institutions at the Senate Committee’s public hearing on its Bill for an Act to repeal the Banks and Other Financial Institutions Act 2004 and re-enact the Banks and Other Financial Institutions Act 2020.
The CBN Director, Legal Services, Kofo Salam-Alda, made the submissions to the Senate Committee.
The apex bank is also seeking the amendment of the Banks and Other Financial Institutions Act to enable it freeze accounts linked to criminals.
He said fraud and financial crimes would be greatly reduced by giving the CBN Governor the power to apply to the court for orders to freeze accounts, which were deemed to be linked with criminal and other civil infractions.
He said “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 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.”
Salam-Alada added that the omission eroded the powers of the CBN and created a huge gap in the regulatory and resolution framework.
“Therefore, we propose that the extant provisions should be reinstated. We propose the inclusion of provisions to improve the administration of dormant accounts in the Nigerian banking sector,” he added.
In his presentation, the Managing Director, Nigeria Deposit Insurance Corporation, Umaru Ibrahim, said meeting was the most appropriate step to take in the face of current economic challenges.
He said, “A lot has happened since 2004 to the banking sector. A lot has been put in place to make it efficient, a lot has taken place by way of introducing new products, agent banking; mobile banking.
“All these speak to the need to have a harder look at BOFIA. NDIC and Central Bank are partners working for efficient and healthy banking system.
“We agree to disagree with CBN on certain issues. The two institutions have come a long way on shared responsibilities.”
In the presentation by the NDIC Director, legal department, Bellema Taribo, he said there was a need for legislation to tackle the issue of insider abuse in banks.
He dismissed the push for appointing another liquidator for banks and affirmed that the NDIC was the sole liquidator of banks.
