CENTRAL BANK OF NIGERIA Regulatory Update July REGULATORY UPDATE, JULY Central Bank of Nigeria, Regulatory update, June 2016.

Transcription

1 1. CENTRAL BANK OF NIGERIA Regulatory Update July REGULATORY UPDATE, JULY Central Bank of Nigeria, Regulatory update, June 2016.

2 6. CIRCULAR NO 41: MONETARY, CREDIT, FOREIGN TRADE & EXCHANGE POLICY GUIDELINES FOR FISCAL YEARS 2016/2017 The CBN has released the Monetary, Credit, Foreign Trade & Exchange Policy Guidelines ( Monetary Policy Circular ) for fiscal years 2016/2017. The Monetary Policy Circular amends the Monetary Policy Circular 2014/2015. Some of the major amendments to the Monetary Policy are as follows: 2014/2015 MONETARY POLICY CIRCULAR 2016/2017 MONETARY POLICY CIRCULAR Cash Reserve Ratio ( CRR ) CRR for non-public sector deposit liabilities is to remain at 12.0 per cent, while the CRR for public sector deposit liabilities, is to remain at 50.0 per cent. There is no distinction in CRR for public and non-public sectors deposit liabilities. The deposit liabilities for both sector is to be at twenty (20.00) percent. Liquidity Ratio ( LR ) The maintenance period for the CRR is to remain four to five weeks. The Monetary Policy does not provide minimum LR for non-interest bank. The maintenance period for the CRR I to be determined by the Bank from time to time. The minimum LR for non-interest bank is (10) percent. Net Exchange Position. Foreign Trading This is not provided for under the 2014/2015 guidelines. Authorised Dealers are required to maintain a maximum Net Foreign Exchange Trading Position of 0.5% of their shareholders funds unimpaired by losses at the close of business each day. However, the limit is subject to review from time to time. Foreign Exchange Interventions by the CBN Discount Window Operations ( DWO ) Remittance of value Added Tax (VAT), The CBN is to intervene in the inter-bank market as and when necessary. The discount window is to be open on overnight basis to provide standing lending facility in line with the subsisting guidelines. Banks are to remit these collections on behalf of the federation and the Federal 1 In addition to the CBN intervention, all foreign exchange transactions by authorized dealers is now required to be reflected on Reuters Deal Tracker and all trades must be confirmed on the Reuters Dealing 3000 Extra terminal. The discount window is to be open on every business day to provide Standing Lending Facility and Standing Deposit Facility to authorized dealers to enable them squareup their positions. Banks are to remit these collections on behalf of the federation and the Federal

3 Custom Duties and other Collections: Government by the next working day. Government on a daily basis. There is however no special account allotted by the Federal Government for the payment of these collections These collections are to be paid into the Treasury Single Account (TSA). Treasury Single Account ( TSA ) Bank Verification Number ( BVN ) Development of Small Medium Enterprises The TSA was not in full operation. This is not provided for under the 2014/2015 guidelines. A N200 billion SME Restructuring and Refinancing Facility (RRF) established to re-finance and restructure banks' existing loan portfolios to manufacturers at 7.0 per cent per annum. The TSA becomes operational by the Federal Government; and all FGN public sector funds will now be remitted to the CBN save the Judiciary and National House of Assembly funds. The BVN scheme becomes operational. New SME scheme introduced. A N300 billion Real Sector Support Facility was established as part of the efforts to unlock the potential of the real sector to engender output growth, value added productivity and job creation. The Facility supports large enterprises for start-ups and expansion financing needs of N billion subject to a maximum of N10.00 billion at an allinclusive interest rate of 9.00 percent. Establishment of N billion SMEs Credit Guarantee Scheme (SMECGS) to encourage banks to lend to the productive sectors of the economy, by providing per cent guarantee on loans granted by banks to SMEs and manufacturers. The CBN shall sustain the scheme in the programme period. Micro, Small and Medium Enterprises Development Fund Established in 2014 to provide wholesale facilities, refinancing and guarantee to MSMEs, will as well as to provide liquidity support to microfinance banks and institutions for on-lending. Sixty (60) per cent of the Fund will be devoted to Additional two (2) per cent has now been earmarked for persons living with disabilities and 10.0 per cent for Start-ups. The CBN is to sustain the scheme for the programme period. 2

4 women entrepreneurs. Commercial Agricultural Credit Scheme ( CACS ) The CACS was for an initial period of seven (7) years from The CACS has now been extended to 2025 with 60.0 per cent of the Fund being dedicated to the promotion of seven (7) focal commodities (rice, wheat, oil palm, fish, sugar, cotton and dairy) that contribute significantly to the nation's agricultural import bill. Foreign Market Exchange The maximum limit for naira debit and credit cards utilization was reviewed upward from the value of US$40, to US$150, per annum. The maximum limit for naira debit and credit cards utilization is now at the value US$50, per annum. In addition, daily cash withdrawal limit is pegged at US$ per person per day. Limit on POS transactions was not provided for. Authorised dealers were allowed to sell foreign exchange cash to BDCs subject to a maximum limit of US$250, per week per BDC. However, transactions done through other electronic channels and Point- of-sales (PoS) terminals are not subject to daily limit; and the settlement for the cards shall continue to be with interbank funds. Authorised Dealers are not allowed to sell foreign exchange to BDCs and other Authorised Buyers. Authorised Dealers are to henceforth utilize interbank funds strictly for funding of Letters of Credits, Bills for Collection and other invisible transactions, subject to appropriate documentation as extant regulation and funds purchased from the interbank are to be utilized within 72 hours from the value date failing which such funds must be returned to the CBN for repurchase at the Bank's buying rate. CBN Foreign exchange intervention funds shall neither be tradable in the inter-bank Foreign Exchange Market nor sold to BDCs. Payment for goods and services provided in Nigeria by resident companies and individuals are not be made in foreign currency. The general public is to note that it is a criminal offence as stipulated in section 3

5 20 (5) of the CBN Act 2007 for any person or body corporate to refuse the acceptance of Naira as Legal tender currency for payment for goods and services in Nigeria. However, agencies of Government and operators permitted by law whose business transactions allow payment/receipts in foreign currency are exempted. The CBN shall advise the list of exempted government agencies and operators from time to time. 7. BSD/DIR/GEN/LAB/09/033: REVIEW OF OPERATIONAL GUIDELINES FOR BLACKLISTING 7.1. The CBN, pursuant to its power under the BOFIA and the CBN Act, has issued the Operational Guidelines on Blacklisting ( the Guidelines ) in the financial industry; to provide guidance on the procedure for forwarding names to the Banker s Committee for inclusion in the Register of Terminated, Dismissed or Convicted Staff of Banks and Other Financial Institutions The Guidelines was premised on the requirements of Section 48 (4) of BOFIA which empowers the CBN on the recommendation of several financial institutions to blacklist a number of financial officers on the grounds of fraud or dishonesty of such officers Section 48(4) of BOFIA provides that Any person whose appointment with a bank has been terminated or who has been dismissed for reasons of fraud, dishonesty or convicted for an offence involving dishonesty or fraud shall not be employed by any bank in Nigeria Prior to this time, there has been an increase in the number of petitions to CBN for the reversal of blacklisted staff by banks due to failure of the management of these banks to effectively comply with the process of investigation and granting of fair hearing to erring staff before forwarding their names for blacklisting; as well as the attitude of these financial institutions to recommend its officers on issues bordering on matters like lateness to work, abandonment of duty, etc The Guidelines sets out the conditions for blacklisting, the procedures for blacklisting, the process for delisting and motion for reconsideration. 4

6 Some salient provisions of the Guidelines are examined below Objectives of the Guidelines The Guidelines are aimed at: preventing discredited and fraudulent staff from being recycled within the financial system; ensuring that only staff with credible references are employed within the financial system; deterring other staff from committing frauds/dishonest acts; holding accountable individuals that fail to meet the expected standards of integrity and professionalism required of bankers; and ensuring operational compliance by banks and other financial institutions with Section 48 (4) of BOFIA Procedure for Blacklisting a) The officer to be blacklisted must have been dismissed from employment or his employment terminated on the grounds of fraud, dishonesty or conviction for an offence involving dishonesty or fraud; b) A disciplinary committee must have conducted a thorough investigation whilst ensuring that the staff concerned has been granted fair hearing and consequently establish that the staff involved has committed an act of fraud and dishonesty; c) Thereafter, the decision of the committee must be communicated to the staff involved; d) The financial institution shall forward the returns (all relevant information such as name, state of origin, date of birth, gender etc.) on dismissed or terminated staff (including temporary and contract) on grounds of frauds and forgeries to the CBN along with a declaration from the bank that it followed due process before arriving at the decision which must be signed by the Managing Director; and e) Upon receipt of the foregoing, the CBN will review the documents and establish that due process was actually followed. Thereafter, the Head, Bankers Committee upon confirmation shall subsequently blacklist the persons Delisting It is pertinent to note that blacklisting may be reversed or reconsidered where the appropriate steps are taken. A blacklisted person can be delisted where there is a court order directing the CBN to issue a delisting order or where there is a request from the financial institution following CBN s concurrence to the motion for reconsideration. 5

7 A motion for reconsideration may be filed with the CBN where there is new evidence or facts which were not made available during the investigation and may probably alter the result of the investigation Premised on the above, the Disciplinary Committee of the affected institution may be asked to review the case and after the review where it is established that the staff was not guilty of fraud or acts of dishonesty, the financial institution would initiate the delisting process by writing to the CBN to delist such a person from its black book. The financial institution is therefore expected to forward the full report of its investigation to the CBN for review after initiating the delisting process Also important to note is that where the CBN determines that due process was not followed or the offence listed is not a blacklistable offence, the CBN will sanction the erring financial institution for not adhering to the provision of this guideline as empowered by Section 60 of BOFIA. Key Contacts Olaitan Oladejo Associate Olaitan.oladejo@advocaat-law.com Ola Alokolaro Partner ola.alokolaro@advocaat-law.com 6