September 27, 2020
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NDIC wants National Assembly to criminalise insider credit in banks

By on July 17, 2020 0 108 Views

The Nigeria Deposit Insurance Corporation is seeking legislation on the criminalisation of insider loans in banks and the strengthen of the power of the corporation to ensure that management and directors of banks are held accountable in the event of the failure of their institutions.
In a statement by the chief executive of the deposit insurance corp., Umaru Ibrahim, the NDIC is also seeking clarification from the National Assembly on some ambiguity in the proposed amendments to the Banks and Other Financial Institutions Act (BOFIA) 2004 which might lead to the overlapping of role between the corporation and the Central Bank of Nigeria (CBN).
Ibrahim who made a presentation at the public hearing for the amendment of the act, noted that directors of banks and other financial institutions should be liable personally for the failure of the institutions the supervise.
“Directors of banks should be held, are personally liable without any limitation for the causes of the failure of their banks where they have been found to be negligent in managing the bank,” he said.
The corporation also wants the parliament to include provisions in the amendment to prohibit insider loans while criminalising insider loans by making it an offence punishable with imprisonment and fine for directors of licensed banks to obtain credit facilities, secured or not, from their own banks.
The corporation said there was no need for the approval of the CBN to be sought in the implementation of supervision, control and management and resolution of distressed banks as reflected in the bill as this constituted the core mandates of the corporation.
“The corporation should, therefore, carry out these functions in consultation with the CBN, not with the consent of CBN, as both institutions are independent,” it added.

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