The Central Bank of Nigeria (CBN) is requesting the creation of a credit tribunal in the mould of the defunct failed banks tribunal to strengthen credit recovery processes and enforce collateral rights. It is also requesting the statutory powers to freeze accounts linked to criminals in the country. These requests were made during the Senate Committee’s public hearing on a 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.

CBN’s Director of Legal Services, Kofo Salam-Alada, in his presentation, told lawmakers that the 2004 BOFIA Act 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. “This omission,” he told the Senate, “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,” Salam-Alada said. The tribunal, in his view, 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.

 The CBN also called for the inclusion of provisions to improve the administration of dormant 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 advocated for statutory powers to intervene in the process of managing a failing bank and nursing it back to sound financial health. The CBN urged a review of framework for managing failing institutions in line with international standards; to properly delineate roles for the agencies 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institutions and those with responsibility for resolving banks and other financial institutions whose licenses have been revoked.

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