The House of Representatives on Tuesday directed its Banking Regulations and Banking Institutions Committees to hold an investigation hearing into commercial banks’ and financial institutions’ failure to comply with the Central Bank of Nigeria’s Net Open Position Limits instructions.
NOP represents the net outstanding balance of all assets, liabilities, and off-balance-sheet items in that currency.
The CBN, in a circular, ED/FEM/PUB/FPC/001/001, dated January 31, 2024, co-signed by its Director, Trade and Exchange, Hassan Mahmud, and Rita Sike on behalf of the Director, Banking Supervision, addressed to all banks, directed that the NOP limit “should not exceed 20% short or 0% long of shareholders’ funds unimpaired by losses using the Gross Aggregate Method.”
The apex bank’s communication also said that
“banks whose current NOP exceed 20 per cent short of 0 per cent long of their shareholders’ funds unimpaired by losses are required to bring them to prudential limits by February 1, 2024.”
On Wednesday, during a plenary session presided over by Speaker Tajudeen Abbas, the House adopted a motion of urgent national importance on the need for banks to implement the CBN’s policies on holding excess long foreign exchange and NOP limits, which was brought to the floor of the House by Babajimi Benson, a member representing Ikorodu Federal Constituency.
The congressman emphasised that the CBN is responsible for controlling the country’s monetary policy, as stated in the CBN Act.
He stated that Sections 8 (4) and (5) of the CBN Act demand that the CBN Governor
“is expected to brief the relevant Committees of the National Assembly during the semi-annual hearings as well as provide periodic reports on the performance of the economy to the National Assembly.
“There has been a steady rise in the rate of the dollar in comparison to the naira. It rose to N1,520 to the dollar in the last week. This astronomical rise has been caused by diverse market forces and certain economic policies adopted by the government, including the liberalisation of the dollar.
“Commercial banks aThe House of Representatives on Tuesday mandated its Committees on Banking Regulations and Banking Institutions to conduct an investigative hearing on the non-compliance by commercial banks and financial institutions with the Central Bank of Nigeria’s directives on the Net Open Position Limits.nd certain financial institutions in Nigeria usually hold back a large part of forex they obtain either through purchase, borrowing or allocation from the CBN rather than lending to their customers with a view to selling it when the exchange rate is high.”
cc: Punch Ng
