Insider loan deal: Bank CEOs to face three years imprisonment
By Kayode Tokede
The Central Bank of Nigeria (CBN) has said banks’ Chief Executive Officers (CEOs) are to face not less than three years imprisonment or a fine of not less than N5million or both for personal involvement in any advance, loan or credit facility.
This is contained in the Banks and Other Financial Institutions Act (BOFIA), 2020 that was signed recently by President Muhammadu Buhari.
The BOFIA that was posted on the apex bank official website during the weekend, states that CEO, officials of banks operating in the country must declare the nature of loans to his or her bank.
Accordingly, the Act stated that “grant any advances, loan or credit facility to any person, unless it is authorized in accordance with the rules and regulations of the bank and in line with the regulations on collateralisation issued by the bank.”
For defaulting, the Act, explained that, “ Any manager or officer who contravenes or fails to comply with any of the provision commits an offence and is liable on conviction to imprisonment for a term of not less than three years or a fine of not less than N5million or both, any gain or benefit accuring to any person convicted under this section, by reason of such contravention, is forfeited to and vested in the bank.”
The Act explains further that a director of a bank who is interested in the grant of advance, loan or credit facility, must declare the nature of such interest before the meeting of the board of directors of the banks.
The BOFIA Act on banking sector resolution fund and resolution tools states that “Without prejudice to the provisions of the Asset Management Corporation of Nigeria Act, there is established the Banking Sector Resolution Fund ( in this Act referred to as ‘Resolution Funds’) which shall be domiciled with the Bank, and into which shall be paid all on contributions and levies imposed under this part that provided that the Governor shall, with the approval of the Board, determine the fate of commencement of the Resolution Fund (commencement date).”
The Act explains that Banks operating in the country are expected on the first business day in each calendar year to pay into the Resolution Fund, the sum of N10billion or such amount as the Board of the bank may determine.
