- Lists infractions and heavy sanctions for defaulting commercial banks
The Central Bank of Nigeria (CBN) has rolled out penalties to be meted out to participating commercial banks that fail to comply with the terms and conditions in implementing the Nigeria Electricity Market Stabilisation Facility (NEMSF).
The central bank in a circular by its Director, Financial Policy and Regulation Department, Mr. Kevin Amogu, posted on its website monday, listed 10 infractions and accompanying sanctions to be received by any defaulting participating commercial bank.
The CBN had in collaboration with the Ministry of Petroleum Resources, Ministry of Power and the Nigerian Electricity Regulatory Commission (NERC) signed a Memorandum of Understanding (MoU) on the NEMSF.
The N213 billion facility was launched in 2014 and was expected to bring about improvements in power supply for the benefit of all Nigerians.
In May this year, the CBN disbursed N55,456,161,481 from the facility, which was the fourth batch from the N213 billion.
Listing the sanction in the latest circular, the central bank stated that firstly, if a collection bank and the principal collection bank fails to provide the refinancer/administrator with statement of account for the transaction account within five business days after the end of each month, the first sanction would be a warning letter to the bank, instructing that the infraction must be remedied within two working days.
Further infraction on the matter involves a financial penalty of a minimum of N500,000 daily until the infraction is remedied, on each account that such infraction is committed.
“If there is further infraction by the deposit money bank (DMB) after payment of the above financial penalty, the DMB’s participation as a Mandate Bank under the CBN-NEMSF shall be terminated,” it added.
Secondly, the circular stated that if a DMB does not comply with a request by the refinancer/administrator to provide copies of statements for any other Discos’ accounts maintained by it and such other information relating to the transaction effected or to be effected on the transaction accounts within five business days from the date of such request, the bank would be served a warning letter at first.
“Failure to comply within two working days will attract a financial penalty of a minimum of N500,000 daily until the infraction is remedied. If there is further infraction by the DMB after payment of the above financial penalty, the DMB’s participation as a Mandate Bank under the CBN-NEMSF shall be terminated,” it added.
Thirdly, any DMB that does not comply with the operational process document (circular) issued by the CBN pursuant to the accounts administration agreement, would also be issued a warning letter with other sanctions stated in the first and second infractions stated above.
Fourthly, if there is a closure of a transaction account by a DMB without prior written consent of the refinancer, the penalty, according to the CBN, would be N2 million and further infraction entails terminating the DMB’s participation as a Mandate Bank.
Other issues that would be regarded as infractions as highlighted by the central bank that could attract various forms of sanctions include: when a collection bank and principal collection banks do not provide the right to view Transaction Accounts or any such other information relating to the transactions effected or to be effected on the Transaction Account in real time; where collection banks allow revenues (including cash collections and revenues received from all electronic or other platforms) generated by any Disco to be paid directly in any account other than the Feeder Collection Accounts as stipulated in the Account Administration Agreement; and where collection banks allow a debit/withdrawal from a Feeder Collection Account (FCA) to the principal collection account contrary to terms of the Accounts Administration Agreement.
Others include a situation where the DMBs open additional bank account(s) for a Beneficiary Disco, whether not for the purpose of receiving payments, fines, fees or electricity consumed by its customers without the prior written consent of the refinancer as well as where the DMBs permit debit/withdrawals from the FCA to a non-principal collection account.
These attract sanctions that range from N2 million and their termination as Mandate Banks.
Meanwhile, the naira closed at N422 to the dollar on the parallel market monday, marginally stronger than the N423 to the dollar it was last Friday. On the interbank forex market, the spot rate of the naira closed at N314.20 to the dollar, slightly higher than the N314.77 to the dollar it closed last Friday.