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Senate passes bill to re-enact BOFIA, which provides regulatory framework for Nigerian financial system

By The Rainbow
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The has passed a bill to repeal the Banks and Other Financial Institutions Act (BOFIA) CAP B3 Laws of the Federation of Nigeria 2004, which provides financial framework for the Nigerian financial system.

The upper legislative assembly seeks to re-enact the law under Banks and Other Financial Institutions Act (BOFIA) CAP B3 Laws of the Federation of Nigeria 2004 (Amendment) Bill, 2020, which successfully passed on Wednesday.

The Bill sponsored by Senator Uba Sani (Kaduna Central) and co-sponsored by Senator Betty Jocelyn Apiafi (Rivers West), seeks to strengthen the Nigerian financial system, regulate banking and businesses of other financial institutions by prohibiting the carrying on of such businesses in Nigeria except under licence and by a company incorporated in Nigeria. 

The Bill also made adequate provisions for proper licensing, supervision and revocation of licenses of such institutions by the Central Bank of Nigeria.

The passage of the Bill passed normal legislative processes, which started with the Sponsors presenting the Bill for First Reading on Tuesday, May 12, 2020 and a Second Reading on Tuesday, May 19, 2020. Following the debate by the Senate at the plenary, the Bill was referred to the Senate Committee on Banking, Insurance and Other Financial Institutions for further legislative actions.

Wednesday's passage of the Bill, after  a clause-by-clause consideration by the Senate at its Plenary, followed the public hearing by the Senate Committee on Banking, Insurance and Other Financial Institutions on Wednesday, July 15, 2020, to consider the opinions of stakeholders in the industry such as the Central Bank of Nigeria (CBN), the Federal Ministry of Finance, Body of Bank CEOs and the Nigeria Deposit Insurance Company (NDIC).

Others at the hearing were the Securities and Exchange Commission (SEC), Corporate Affairs Commission (CAC), the Chartered Institute of Bankers of Nigeria (CIBN), the Nigeria Labour Congress (NLC), the Financial Correspondents Association of Nigeria (FICAN), the Association of Senior Staff of Banks, Insurance & Financial Institutions (ASSBIFI) and the National Union of Banks, Insurance and Financial Institutions Employees (NUBIFE).

However, for the Banks and Other Financial Institutions Act (BOFIA) CAP B3 Laws of the Federation of Nigeria 2004 (Amendment) Bill, 2020, passed by the Senate to become Law, it has to be similarly passed by the House of Representatives; after which the Reports will be harmonised and forwarded to the President for assent.

The Central Bank of Nigeria (CBN) in its presentation at the public hearing had pushed for a review of the framework for managing failing institutions, a restriction remedy for successful action against revocation of licenses in line with international standards and the creation of a Credit Tribunal. 

The CBN, which was largely backed by the Nigeria Deposit Insurance Corporation (NDIC), the Chartered Institute of Bankers of Nigeria (CIBN) and other stakeholders, also made a case for enhancement of regulatory measures for single obligor limits, transfer of significant holdings and the strengthening of the sanctions regime to make it more deterrent.