CBN Approves Revised Banking Model, Banks Get Oct Deadline

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ABUJA, Sept 08, (THEWILL) - As part of the blue-print geared towards reforming the Nigerian financial system, the Central Bank of Nigeria (CBN), in compliance with the statutory provisions of the Banks and Other Financial Institutions Act (BOFIA) regarding the conduct of banking business has concluded the review of the universal banking model in Nigeria and issued new rules and guidelines for the envisaged new licensing regime.

CBN Head of Corporate Communication, M.M. Abdullahi in a signed statement today said the new guidelines include the regulation on scope of Banking Business. This repeals the universal banking regime and requires banks to divest from all non-banking business as the guideline defines the new types of banking licenses, permitted activities and transition timelines for restructuring.

The apex bank said, special banks/institutions such as the Primary Mortgage Institutions, Microfinance Banks, Non-Interest Banks, Development Banks and Discount Houses shall continue to perform their specialized roles within the framework of existing guidelines.

"All the existing universal banks are required to prepare and submit to the CBN their plans on compliance with the new banking regime not later than 90 days from October 4, 2010," CBN said.

In view of this development, the CBN will discontinue the issuance of universal banking licenses, prohibit banks from undertaking non-banking activities while new licenses are to be issued to banks to perform the following types of businesses: commercial banking (regional, national and international); merchant banking; specialized banking (microfinance, mortgage, non interest (regional and national) and development financial institutions).

The banks have been advised that the responsibility for ensuring compliance with the guidelines resides with their boards and management while the CBN reserves the right to stipulate additional requirements prior to granting any approval or authorization.

THEWILL recalls that the CBN had in March 2010 as part of the on-going reform agenda circulated a draft exposure report detailing its intent to modify the current banking model/arrangement and defining a new banking license regime, going forward. Comments from key industry operators/stakeholders were received, considered and served as input towards the finalization of the exposure draft document.