ABUJA— TWO bills seeking to check the Central Bank of Nigeria (CBN) in its move to raise the minimum capital base of operating banks to N25 billion were yesterday introduced on the floor of the Senate. An amendment bill to the Banks and Other Financial Institutions Act (BOFIA) which was read for the first time yesterday, provides for the creation of mega, medium and small banks with minimum paid up share capital of N25 billion, N10 billion and N5 billion respectively.
The other bill on the amendment of the CBN Establishment Act seeks to subject the appointment of the governor and the board of directors of the apex bank to Senate approval and to raise the minimum paid up capital of the CBN to N60 billion from the current N350 million.
Also yesterday, the upper chambers of the National Assembly responded positively to another bill to restrict the use of mobile phones in certain places and under certain circumstances.
The two bills to check the CBN, which successfully passed through first reading yesterday, were sponsored by Senators Ambuno Zik Sunday, Farouk Bello and Isaiah Balat, all members of the Senate Committee on Banking, Insurance and Financial Institutions. Section 9 (1) of the BOFIA Amendment Bill reads: “Banks shall be categorised according to paid-up share capital.
There shall be three categories of banks as follows: (a) Mega banks with minimum paid-up share capital of N25 billion; (b) Medium banks with minimum paid-up share capital of N10 billion; and(c) Small banks with minimum paid-up share capital of N5 billion. The prescriptions contradict last month's policy from the CBN, asking banks to raise their shareholders funds to a minimum of N25 billion before the end of 2005. Other provisions in the BOFIA Amendment Bill are the establishment of crisis threshold upon which the CBN is to intervene to avoid wide scale crisis in the industry.
Section 38 b (1) of the amendment bill provides: “The governor shall have the power to constitute a Crisis Management Committee whenever any one or more of the following conditions arises: (i) Where banks that are critically distressed control 30 per cent of the total assets of all licensed banks; (ii) When 15 per cent or more of the deposit liabilities of all licensed banks is threatened; and (iii) When 45 per cent or more of the total loans and advances of all licensed banks become non-performing.
The crisis management committee which is to be headed by the CBN Governor is to comprise the Minister of Finance or a representative, Managing Director of the NDIC, Director-General of the Securities and Exchange Commission and the Commissioner of Insurance. The committee is to, among others, coordinate actions by the regulatory institutions to stave off systemic distress in the financial industry.
The committee will also provide a single channel of communication and prepare official statement to forestall misinformation in the industry.The second bill to amend the CBN Establishment Decree seeks to raise the authorised share capital of the CBN from the present N300 million to N60 billion and to subject the appointment of its top management to Senate approval. The bill also aims to bring the CBN’s monetary policy decisions to the examination of the lawmakers. The amendment to section 9(1) of the present Act reads: “The governor and deputy governors shall be persons of recognised financial experience and shall be appointed by the president subject to confirmation by the Senate by instrument under the public seal and on such terms and conditions as may be set out in their respective letters of appointment.”
An amendment to section 9 (4) (a) which aims to compel the CBN to subject its monetary policy and other economic projections to the review of the National Assembly at semi-annual interactions reads:”The Chairman of the Board shall appear before the National Assembly at semi annual hearings as specified in paragraph (b) regarding (i) Efforts, activities, objectives and plans of the Board with monetary policy; and (ii) Economic development and prospects for the future described in the report required in subsection.The CBN had, last month, issued a directive, asking all banks in the country to raise their shareholders funds to a minimum of N25 billion before the end of 2005.
The CBN directive has, however, elicited sharp responses from within and outside the industry with suggestions that the directive would lead to the collapse of several banks. Supporters of the policy have, however, deposed that it would lead to the consolidation of the banks allowing them to properly facilitate the growth of the real sector of the economy.
Bill to restrict use of GSM coming
Also yesterday, the Senate moved to curtail accidents arising from the use of mobile telephones as it responded positively to a bill seeking to restrict the use of mobile phones in some restricted places and under certain circumstances.
The proposed legislation entitled: “Mobile Phone (restricted places and circumstances) Bill 2004" is to be dedicated in memory of a four-year-old girl who died when the life support system she was hooked on to was demobilised during an operation at the National Hospital, Abuja.
The bill to prohibit the use of mobile phones sponsored by Senator Abiola Ajimobi (AD, Oyo South) seeks to bring legal sanction against the use of mobile phones in hospitals, banks, court rooms, the chambers of the National Assembly, fuel stations, and libraries. The use of mobile phones, according to the bill, is to be also restricted in such places where software are kept, commercial vehicles, trains, aircraft and ships.
Speaking in support of the bill, Senator Ajimobi argued that the use of mobile phones in the above places could cause distractions and in the case of hospitals, could lead to loss of human life. He cited the case of the unnamed four-year-old girl who was on a life support system during a surgical operation to correct a leg fracture. “An unlettered fellow may not just know where and when an operation is taking place and may switch on his phone to make or receive some reckless calls with serious consequences to others.”
Though the Senate did not form a quorum at its sitting, support for the bill was overwhelming among the senators present. Senate leader, Dr. Dalhatu Tafida, praised Senator Ajimobi for the meticulous research conducted in presenting the bill, saying that most advanced nations had made laws restricting the use of mobile phones in certain places and circumstances.
Before passing the bill on to the Senate committee on communications for further development, Senate President, Chief Adolphus Wabara, declared that the bill would be dedicated to the four-year-old girl who died as a result of the use of a mobile phone at the National Hospital.
