BNW

 

B N W: Biafra Nigeria World News

 

BNW Headline News

 

BNW: The Authority on Biafra Nigeria

BNW Writer's Block 

BNW Magazine

 BNW News Archive

Home: Biafra Nigeria World

 

BNW Message Board

 WaZoBia

Biafra Net

 Igbo Net

Africa World 

Submit Article to BNW

BNWlette

BNWlette

BNWlette

BNWlette

BNWlette

 

Domain Pavilion: Best Domain Names

National News : N25bn banks capitalisation: Amendments to CBN act, BOFIA through in Senate

....

[Image]
....

  Home  |  Cover Stories  |  National Newsreel  Politics  |  Business  |  Sports  |  World  | Contact

Towards a better life for the people

Search The Archives

 

Cover Stories
National News
South West
Niger Delta
South East
North
Politics
Business
Sports
World
Viewpoints
Features
 
.....

NATIONAL NEWS


N25bn banks capitalisation: Amendments to CBN act, BOFIA through in Senate

By Emmanuel Aziken & Luka Biniyat
Friday, August 27, 2004

ABUJA —THE Senate yesterday with near unanimity pushed through amendments to the Central Bank of Nigeria Act and the Banks and other Financial Institutions Act (BOFIA) which seeks to reverse the recent CBN guidelines prescribing a minimum N25 billion for the country's banks. The two bills sponsored by three members of the Senate Committee on Banking, Insurance and Financial Institutions were applauded by senators as a necessary check against perceived determination of the CBN to destablise the financial system through its prescription of the N25 million capital base. However, CBN governor, Professor Charles Soludo said yesterday that 11 banks were currently insolvent, 24 marginally ill and 30 in good shape for business.

Under the bill amending BOFIA, banks would be categorized as small, medium and mega banks with paid-up capital at N5 billion, N10 billion and N25 billion respectively.

 Chairman of the Banking Committee and lead sponsor, Senator Zik Ambuno Sunday in a session with newsmen at the end of the day's session, was, however, vague on whether their prescription pertained to paid-up capital or total captialisation. Affirming that the proposals were open to change, he said that the public hearings to be conducted within days would determine whether to adopt the paid-up capital as in the subsisting law or total capitalization as prescribed by the CBN guidelines. Leading the debate on the BOFIA amendment bill, Senator Sunday lamented the arbitrariness of the CBN in prescribing its new guidelines on capital base of banks. 

“In January 2004 in the Credit and Monetary Policy guidelines announced by CBN, banks were required to raise their capital base to N2bn by December 2005. Then suddenly six months later, the CBN made a round about turn without consultations with any of the stakeholders and announced the infamous N25b capitalization for banks across board.”

While submitting that there was a need to increase the capital base of banks, Senator Sunday, however, bemoaned the poor consultations within the CBN or among other stakeholders on the issue, saying the present course would be counter productive and cause the loss of between 30,000 and 50,000 jobs in the industry. Support for the amendment bill came from Senators Nicholas Ugbane (ANPP, Kogi East), Olorunnimbe Mamora (AD, Lagos East), Jonathan Zwingina (PDP, Adamawa), Aba Aji (ANPP, Borno), and Udoma Udo Udoma (PDP, Akwa Ibom).

Contributing to the debate, Senator Ugbane alleged that the “CBN has caused a lot of distortion and financial vibration in the economy,” through the guidelines, even as he said the apex bank has been found wanting on the management of the country's currencies. Senator Udoma, while submitting that the N25b requirement was high, however, asked for a clearer definition of the base being sought by the sponsors.

Senator Ken Nnamani (PDP Enugu), expressed caution against the amendment bill, saying that it was not unlikely that the mega banks under the arrangement could squeeze out the smaller banks as he said the bill would reverse the gains of deregulation. 

“In an era of deregulation, it will be irrelevant to go back to regulation,” Senator Nnamani said. Senator Bob Ekarika (PDP, Akwa Ibom) rejected submissions that the CBN guidelines envisaging mergers would lead to job losses before he was shouted down by his colleagues on the floor. Support for the bill amending the CBN decree No 41 of 1999, co-sponsored by Senators Farouk Bello and Isaiah Balat, was unanimous on the Senate floor, as Senators affirmed that the CBN needed to be brought into ongoing reforms being implemented by the Federal Government.

“We are in an era of reforms, we are in an era of democratization and it is proper for us to keep up with these things,” Senator Olorunnimbe Mamora (AD, Lagos East) submitted.  Other Senators who spoke in support of the CBN amendment bill were Senators Clement Awoyelu (PDP, Ekiti); Baba Tela (PDP, Bauchi) and Oserhenmien Osunbor (PDP, Edo Central).

The amendment bill also aims to subject the appointment of the CBN Governor to Senate confirmation and compel the regulatory bank to submit periodic analysis of the economy to the Senate and the House of Representatives. Senator Kassim Isa Oyofo, the lone voice in the Senate leadership in support of the new CBN N25 billion guideline, before he was removed was not in the Senate chambers yesterday.

Briefing newsmen at the end of the session, Senator Sunday said the amendment bills were in support of ongoing reforms by the administration, saying that he was confident the Senate actions would be welcomed by Mr. President. Praising President Olusegun Obasanjo for his commitment to transparency, he denied any subtle or overt influence against the progress of the bill from the executive.

Following the debates, the Senate read the two bills for the second time and passed them on to the Committee on Banking for fine-tuning. The committee, Senator Sunday said is to receive stakeholders' input into the bill through a public hearing which is to be conducted within days.

Meanwhile CBN Governor, Professor Charles Soludo, said yesterday  that 11 banks were currently insolvent, 24 ill and 30 certified okay. Soludo, who was guest of the Nigerian Economic Society at the close of its 45th annual Conference in Abuja, said  that liquidating ailing banks was not the best solution, and that the stronger banks, controlling  about 80% of bank funds, had been approached  to bail out the weak ones.

He cited the case of  a government pararstatal which lodged N17 billion Naira and US$50 million in a particular bank with an  assets base of only N1.11 billion. According to him, such a bank  merely uses government money to buy foreign exchange and do importation, instead of funding the productive sector.

“Apart from that”, “these banks merely buy treasury bills, using the same government money, relax and wait for their interest, which normally, is huge”, he said.

 

 

Home  |  Cover Stories  |  National Newsreel  Politics  |  Business  |  Sports  |  World  | Contact

© 1998- 2004. Vanguard Media Ltd.

 




 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BNWlette

BNWlette

BNW News

BNWlette

BNWlette

Voice of Biafra | Biafra World | Biafra Online | Biafra Web | MASSOB | Biafra Forum | BLM | Biafra Consortium

 

 

 

 

 

 

 Axiom PSI Yam Festival Series, Iri Ji Nd'Igbo the Kola-Nut Series,Nigeria Masterweb

Norimatsu | Nigeria Forum | Biafra | Biafra Nigeria | BLM | Hausa Forum | Biafra Web | Voice of Biafra | Okonko Research and Igbology |
| Igbo World | BNW | MASSOB | Igbo Net | bentech | IGBO FORUM | HAUSA NET (AWUSANET) | AREWA FORUM | YORUBA NET | YORUBA FORUM | New Nigeriaworld | WIC: World Igbo Congress