CBN, stakeholders reject proposed amendment to CBN Act

The Central Bank of Nigeria (CBN) and some stakeholders in Abuja, on Monday rejected a bill seeking to remove the bank’s Governor, Deputy Governors and Executive Directors from the bank’s board. The rejection was the consensus of submissions at a public hearing organised by the House of Representatives Joint Committee on Banking, Currency and Justice on a bill to amend the CBN Act, 2007 in Abuja.
The proposed amendment provides for a former Governor of CBN to be board chairman while also divesting the board of the power of consideration and approval of the bank’s annual budget. In his submission, Malam Sanusi Lamido Sanusi said that the financial autonomy of the bank was germane to its operations.
“An efficient CBN is one that is truly independent,” Sanusi said. Sanusi, represented by Mr Tunde Lemo, CBN’s Deputy Governor, Banking Operations, urged the National Assembly to drop the proposed amendment and enhance their oversight activity through quarterly briefing by the governor. The governor said that the amendment would damage the reputation of the CBN as a lender of last resort and impact negatively on the confidence of Nigerian banks in the international arena.
According to him, taking away the financial autonomy of the bank will limit its ability to fulfil its lender-of-last-resort function of providing loans to distressed banks. He said that the bill, if passed into law, would also limit the ability of the bank to achieve its mandate of ensuring financial system stability.
“By removing this function from the bank, the proposed amendment will increase the investors’ perception of risk in the banking industry,” he said. He said that a strong independent CBN was required to achieve the goals of the Federal Government Vision 20:2020. Malam Adamu Ciroma, a former CBN Governor, in opposing the amendment said that the bill would be counter-productive. Ciroma, who cautioned the House of Representatives against the amendment, said that the people proposed to be on the board might not be knowledgeable in the operations of the bank.
“If the board of CBN excludes the governor of the bank, it means it will comprise of people without the knowledge of the operations of the bank. There is a great danger in excluding the governor from the chairmanship and staff who have knowledge of the system from the board,” he said. He urged the committee to give the proposed amendment a serious thought, as autonomy of the bank allowed it to operate maximally.
Mr.Joseph Sanusi, also a former governor of the CBN, said that the governor of the bank should be allowed to continue to be the chairman of the bank. He called for a workshop to educate Nigerians and members of the National Assembly on the operations of the bank. Rep. Chukwudi Onyereri (PDP-Imo), the chairman of the committee, said that they would be looking at a more dedicated and deliberate regulatory structure for the commercial banks.
According to him, the committee would be considering varied models. “I wish to reiterate our neutrality and emphasise our commitment to discharging our constitutional responsibilities of law making, oversight and representation without fear or favour,” he said. The other stakeholders at the hearing were the NLC, Zenith bank Plc, Eko Bank Plc, Nigeria Deposit Insurance Corporation (NDIC) and Chartered Institute of Bankers of Nigeria (CIBN) among others.