Representatives To Investigate Banks, Financial Institutions For Non-Compliance With CBN’s NOP Directive

The House of Representatives has directed that the House Committees on Banking Regulations and Banking Institutions hold an investigation into banks and financial institutions’ failure to comply with CBN directives on Net Open Position Limits.

This resolution came after Hon. Babajimi Benson moved a motion of urgent national importance in plenary on Wednesday, urging banks to implement CBN policies on excess long foreign exchange and net open position limits.

Hon. Benson stated that the Central Bank of Nigeria (CBN) is responsible for regulating the country’s monetary policies in accordance with the CBN Act.

Furthermore, in carrying out this duty, the CBN has the authority to issue regulations and issue directives for commercial banks and other financial institutions to follow.

He also stated that Sections 8 (4) and (5) of the CBN Act require the CBN Governor to brief the relevant Committees of the National Assembly during semi-annual hearings and to provide periodic reports to the National Assembly on the economy’s performance.

“The dollar’s exchange rate against the naira has steadily increased. In the past week, it has risen to N1,520 per dollar. This astronomical rise has been caused by diverse market forces and certain economic policies adopted by the government, including the dollar’s liberalisation.

“Commercial banks and certain financial institutions in Nigeria usually hold back a large part of the forex|they obtain either through purchase, borrowing, or allocation from the CBN rather than lending to their customers in order to sell it when the exchange rate is high.”

The lawmaker went on to say that speculative activity by commercial banks and certain financial institutions has exacerbated the country’s harsh economic situation and made it difficult for legitimate businesses to obtain forex for business transactions.

“The CBN has intervened by introducing new monetary policies to check the rise in the dollar rate, including Net Open Position Limits and holding excess long foreign exchange.”

He recalled that commercial banks and certain financial institutions are hesitant to implement the monetary measures put in place by the central bank to combat the country’s banks and other financial institutions’ unwholesome practices.

He emphasised that without immediate legislative action to enforce the directives, the country will face severe economic hardship due to rising foreign exchange rates.

However, the House established a Legislative Compliance Committee to ensure full implementation.