The House of Representatives has decided to hold an inquiry hearing into banks and financial institutions’ failure to comply with Central Bank of Nigeria, CBN, regulations on Net Open Position Limits.
The House’s resolution came after Hon. Babajimi Benson moved a motion of urgent national importance in the plenary on Wednesday, urging banks to implement the CBN’s regulations on excess long foreign exchange and net open position restrictions.
Moving the motion, Benson explained that the CBN is responsible for controlling the country’s monetary policy under the CBN Act.
He stated that the CBN has the authority to create regulations and issue directives for commercial banks and other financial institutions to follow in carrying out this task.
The congressman noted that Sections 8 (4) and (5) of the CBN Act compel the CBN Governor to brief the relevant National Assembly Committees during semi-annual hearings and to deliver periodic reports on the economy’s performance to the National Assembly.
He expressed concern that the Dollar’s exchange rate has steadily risen in contrast to the Naira, reaching N1,520 in the last week.
Benson voiced concern that the astronomical growth was caused by a variety of market dynamics as well as government economic measures such as dollar liberalisation.
He further observed that commercial banks and some financial institutions in Nigeria typically keep a considerable portion of the currency they acquire from the CBN, whether through purchase, borrowing, or allocation, rather than lending to their customers, with the intention of selling it when the exchange rate rises.
Benson stated that speculative conduct by commercial banks and certain financial institutions has aggravated the country’s poor economic position and made it impossible for reputable enterprises to obtain forex for business operations.
He underlined that the CBN interfered by implementing new monetary policies to counteract the rise in the dollar’s rate, including Net Open Position Limits and holding excess long foreign exchange.
The legislator went on to say: “We are also aware that commercial banks and certain financial institutions are reluctant to implement the monetary measures put in place by the apex bank to check this unwholesome practices by banks and other financial institutions in the country.”
Benson believed that unless drastic legislative steps were implemented to compel the compliance of these directions, the country would continue to face severe economic suffering as a result of the ongoing rise in foreign exchange prices.
The House approved a bill that would “mandate the House Committees on Banking Regulations and Banking Institutions to conduct an investigative hearing on the non-compliance by banks and financial institutions with CBN directives on the Net Open Position Limits” .
It also directed the Committee on Legislative Compliance to ensure full implementation.