The House of Representatives has mandated the House Committees on Banking Regulations and Banking Institutions to conduct an investigative hearing on the non-compliance by banks and financial institutions with Central Bank of Nigeria, CBN, directives on the Net Open Position Limits.
It also mandated the Committee on Legislative Compliance to ensure full implementation.
This followed the adoption of a Matter of Urgent National Importance on “Need For Banks To Implement CBN’s Policies On Holding Excess Long Foreign Exchange And Net Open Position Limits”
The motion was sponsored by Mr. Babajimi Benson.
It said that “the House: Notes that the Central Bank of Nigeria (CBN) is saddled with the responsibility of regulating the monetary policies of the country as provided for by the CBN Act; Also Notes that in the performance of this duty, the CBN is empowered to make regulations and give directives for commercial banks and certain financial institutions to implement;
“Further notes that Section 8 (4) and (5) of the CBN Act requires that the CBN Governor is expected to brief the relevant Committees of the National Assembly during the semi-annual hearings as well as provide periodic reports on the performance of the economy to the National Assembly. Concerned that there has been a steady rise in the rate of the dollar in comparison to the naira. It rose to N1,520 to the dollar in the last week; Also concerned that this astronomical rise has been caused by diverse market forces and certain economic policies adopted by the government, including the liberalisation of the dollar;
“Further concerned however, that commercial banks and certain financial institutions in Nigeria usually hold back a large part of forex they obtain either through purchase, borrowing or allocation from the CBN rather than lending to their customers with a view to selling it when the exchange rate is high”.
It also said that “Worried that this speculative activity by commercial banks and certain financial institutions has further exacerbated the harsh economic situation in the country and led to difficulty by legitimate businesses to obtain forex for their business transactions; Aware that the CBN has intervened by introducing new monetary policies to check the rise in the rate of dollar among which are the Net Open Position Limits and holding excess long foreign exchange;
“Also aware that commercial banks and certain financial institutions are reluctant to implement the monetary measures put in place by the apex bank to check this unwholesome practices by banks and other financial institutions in the country.”
Mr Benson noted that unless drastic legislative measures are taken to enforce the implementation of these directives, the country will continue to experience dire economic hardship as a result of continuous rise in foreign exchange rates.
Comments are closed.