The Central Bank of Nigeria (CBN) has made it compulsory for commercial banks to publish the names of directors and other insiders who failed to repay their loans within the next 180-day grace period recently approved by the CBN......CONTINUE READING THE ARTICLE FROM THE SOURCE>>>>>
The banks will publish the identities of the directors and insiders in their financial statements.
The CBN’s Acting Director, Financial Policy and Regulation, John Onojah said this during an interview monitored by THE WHISTLER on Wednesday.
Insider loans are credit facilities granted to directors or bank executives among others.
To ensure the safety of the banking system, the CBN had directed that bank “Directors with non-performing insider-related facilities are required to step down immediately from the board, while the bank should commence immediate remediation of the loans through the recovery of the collaterals, including the shareholdings of the affected directors.”
The Banking and Other Financial Institutions Act (BOFIA) 2020 Section 19 (5) stipulates that individual directors cannot hold insider loans valued at more than five per cent of the bank’s paid-up capital, and all insider-related loans within the bank must not exceed 10 per cent of the bank’s total paid-up capital.
The CBN director said the letter to banks is in line with Section 19 of BOFIA 2020, which has been existing.
He said, “It’s a reminder to the banks that they need to comply with that, and that is to strengthen corporate governance and enhance risk management in the banks.
“All banks submit their annual audited accounts to the Central Bank of Nigeria for approval. And so, whether you are quoted or you are not quoted, such information will need to be disclosed.
“It’s a disclosure requirement in the financial statements of banks.”
He said both publicly listed and private companies must disclose insider credit information to the CBN.
Onojah said, “Whatever infraction that the banks commit, or whatever penalty that they pay, as part of disclosure requirements again, you have to disclose that in your financial statement.
“Whether it’s infraction as a result of this non-compliance with insider credit, or any other non-compliance for that matter, you need to disclose that.
“It’s part of why they need to fall in line, because that becomes an issue with them, with investors and with other people.”