CBN SANCTIONS DEFAULT PARTICIPATING COMMERCIAL BANK
BY OMOKHUALE PUAH
The Central Bank of Nigeria (CBN) Monday, assigned penalties for commercial banks who fail to comply with the terms and conditions involved in the implementation of the Nigeria Electricity Market Stabilization Facility (NEMSF).
This statement was included in a circular by the CBN Director, Financial Policy and Regulations Department, Mr. Kelvin Amogu, where he listed 10 infractions and the various sanctions accompanying them, so they could be received by any participating commercial bank who defaults.
The Bill of implementation was signed by the CBN and the Ministry of Petroleum Resources, Ministry of Power and the Nigerian Electricity Regulatory Commission (NERC).
Listing the sanctions the CBN stated in its very words, “If a collection bank and its principal collection bank fails to provide the administrator with the statement of account for its transactions within five days at the end of the month, the bank would be issued a warning letter as its first sanction, which would instruct the infraction to be remedied before the end of two working days”.
Another infraction on the penalty of participating default commercial banks, involves a financial levy of N500, 000 or above daily, until the infaction becomes remedied on each of the accounts the bank is committed to.
“If there is any further infraction by the deposit monetary bank (DMB) after the payment of N500, 000 penalties, the DMBs participation under the NEMSF of the CBN would be terminated”, he said.
Also, in the circular, it was stated that if a DMB does not comply with the refinancer in providing copies of the statements for any other discos accounts maintained by it and other affiliated information either those effected or about to be affected within five working days, the bank would be issued a warning letter as its first sanction. if they fail to comply within two working, the penalty would involve a financial levy of N500, 000 or above daily, until the infraction becomes remedied “If there is any further infraction by the deposit monetary bank (DMB) after the payment of N500, 000 penalties, the DMBs participation under the NEMSF of the CBN would be terminated”, he said.
Furthermore, any DMB that does not comply with the circular issued, would be issued a warning letter alongside its sanctions. It also included the fact that if there is a closure of transaction account by a DMB without a written consent by the refinancer, they would face the penalty of N2M and the other infraction which involves termination of the bank from participating a mandate bank, in the host of other sanctions listed.