New BOFIA Bill: Senate Okays Passage, Awaits Reps’ Concurrence 

• Expectations of fresh impetus heighten for financial sector, banks

BY COBHAM NSA, ABUJA – In a bold move to strengthen the Nigerian financial system for effective service delivery, the Senate on Wednesday, July 22, 2020 passed the Bill re-enacting the Banks and Other Financial Institutions Act (BOFIA) CAP B3 Laws of the Federation of Nigeria 2004 (Amendment) Bill 2020.

By this development, the upper legislative chamber effectively seeks to repeal the Banks and Other Financial Institutions Act (BOFIA) CAP B3 Laws of the Federation of Nigeria 2004.

As usual, the Bill passed through normal legislative processes with its sponsors presenting it for the first reading on Tuesday, May 12, 2020 as well as a second reading on Tuesday, May 19, 2020.

Arising from interventions by Senators at the plenary, the Red chamber had referred the Bill to its Committee on Banking, Insurance and Other Financial Institutions for further legislative actions.

Following the public hearing by the Committee on Wednesday, July 15, 2020, to galvanize and  consider the opinions of stakeholders in the industry, including the Central Bank of Nigeria (CBN); the Federal Ministry of Finance, Budget and National Planning; Body of Bank Chief Executive Officers (CEOs); and the Nigeria Deposit Insurance Corporation (NDIC), Wednesday’s passage of the Bill came after a clause by clause consideration by the Senate at its plenary.

Other stakeholders at the public hearing were Securities and Exchange Commission (SEC), Corporate Affairs Commission (CAC), Chartered Institute of Bankers of Nigeria (CIBN), Nigeria Labour Congress (NLC), Finance Correspondents Association of Nigeria (FICAN), Association of Senior Staff of Banks, Insurance & Financial Institutions (ASSBIFI) and National Union of Banks, Insurance and Financial Institutions Employees (NUBIFE).

According to the lawmakers, aside seeking to invigorate the nation’s financial system in line with global best practices, the Bill, sponsored by Senator Uba Sani of the All Progressives Congress (APC), representing Kaduna Central and co-sponsored by Senator Betty Jocelyn Apiafi of the Peoples Democratic Party (PDP), representing Rivers West senatorial district, also aims at regulating banking and businesses of other financial institutions in the country.

Among provisions in the new Bill are the prohibition of such businesses in Nigeria, except those with valid operating licences and by a company properly incorporated in Nigeria.

Additionally, the Bill makes adequate provisions for proper licensing; supervision; and revocation of licenses of such institutions by the CBN.

However, Senate’s passage of the BOFIA CAP B3 Laws of the Federation of Nigeria 2004 (Amendment) Bill, 2020, will have to await similar action by the House of Representatives before the harmonization of the reports by both legislative chambers for onward transmission to the President for assent.

In its presentation at the Senate’s public hearing, the CBN canvassed position included: a review of the framework for managing failing institutions; a restriction remedy for successful action against revocation of licenses in line with international standards; and the creation of a Credit Tribunal as part of measures to revitalize Nigeria’s financial sector services for the safety and security of bank customers and their deposits.

Fully backed by the NDIC, CIBN and other critical stakeholders in the banking industry, the apex bank also sought to enhance regulatory measures for single obligor limits; transfer of significant holdings; and the strengthening of sanctions regime as a deterrent to erring operators and stakeholders in the industry.