NDIC Expresses Reservations over New BOFIA

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Umaru Ibrahim

Iyobosa Uwugiaren, Ndubuisi Francis and James Emejo in Abuja

The outgoing Managing Director/Chief Executive, Nigeria Deposit Insurance Corporation (NDIC), Alhaji Umaru Ibrahim has expressed reservations over some of the provisions of the
the newly-enacted Banks and Other Financial Institutions Act (BOFIA 2020) which was recently assented to by President Muhammadu Buhari.

He therefore said that he had scheduled a meeting with the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed over the issue.
Critics have described the law as a mixed bag of the good and not-too-good, particularly the increased powers given to the Central Bank of Nigeria (CBN), which could potentially make the regulatory bank become more obstructive.

In an interview with THISDAY, weekend, Ibrahim hinted at the possibility of beginning a fresh process towards the amendment of the BOFIA 2020.

Although the NDIC boss did not mention the grey areas in the new law, he said the NDIC board was still studying the Act, adding that there were aspects of the financial institutions regulatory manual which impinged on roles, functions and powers in the exercise of the corporation’s mandate.

He said the NDIC would soon be engaging the finance minister to discuss specific areas of concerns to the corporation.
He expressed disappointment that despite assurances given to the corporation during the public hearing that the areas of concerns identified in the bill would be duly addressed in the final output, the Act as passed by the National Assembly failed to address the issues.

He said: “So this is the situation. Our board is still examining it. You heard me, I just spoke with the minister and I said I will see her on Tuesday. So there are some issues that we really need to take on board and iron out so that our responsibility and functions and powers are not in any way jeopardised in the interest of the stability of the banking system otherwise we are okay.”
The NDIC boss, whose tenure ends in December said: “We are still studying the BOFIA and we have some areas of concern no doubt and we intend to take up the matter with the appropriate authorities.

“We were at the public hearing, we stated our views and the central bank and all other parties were there and at the end of the day what came out of it to be honest in certain areas did not meet our expectations.

“But when we raised the issues, we were given every assurance that don’t bother, it would not be the way you think; that things will continue to be done smoothly without prejudice to the roles and responsibilities and powers of NDIC as enshrined in our Act.
“But then, as the lawyers would tell you, the provisions of BOFIA as it is, override the provisions of the NDIC Act, should there be a conflict – that is the truth – and to that extent, we would like to see the areas that we are not happy with. We like to see how that could be tackled.

Also, commenting on the seeming decline in Non Performing Loans (NPLs) in the banking sector, Ibrahim said this could be as a result of the reluctance by banks to advance loans especially at a period of economic uncertainty so as to avoid incurring additional bad loans following their experiences in the oil and gas and power sectors.

He said: “It’s a combination of all these factors that makes it difficult even for banks to lend now. That’s why they are washed. There’s so much liquidity and they’ll rather keep that liquidity or go for treasury bills which the government is discouraging – than to give out these loans which are very expensive, you know the interest rates – so that they don’t bite their fingers.”

He also said to maintain confidence in the banking sector, regulators needed to continuously sharpen their skills and capacity and show rapid understanding of the changing financial landscape.

Ibrahim pointed out that the intrusion of technology and technology driven products and services which have disrupted the traditional channels of financial intermediation must be reckoned with.
He said: “It is about bringing some kind of balance and equilibrium between promotion innovation and ensuring that innovation is within limits, understood and managed so that the entire system is not threatened.”