Banks and other financial institutions have been given a 30-day ultimatum by the Central Bank of Nigeria to close accounts without Bank Verification (BVN).

Financial institutions have been directed to link customer’s BVN to related accounts/wallets (except Tier 1).

This requires using the customer’s BVN generated after his/her enrollment to link accounts/wallets to which he or she is a signatory, after validation.

Data from the Nigeria Inter-Bank Settlement System (NIBSS) showed that 57.39 million customers’ accounts have been linked to their BVNs as at April 8.

The directive was given following demand for effectiveness of Know- Your-Customer (KYC) and Customer’s-Due-Diligence principles, and promotion of more safe, reliable and efficient banking and payment systems.

It is also expected that it would address increasing incidence of frauds and to enhance public confidence in the banking industry and provide a guide for BVN operations and watch-list activities carried out by financial institutions in Nigeria.

The statement added;

“No new account/wallet shall be allowed to operate without BVN (except inflows), however, any account/wallet without BVN shall be closed within 30 days.

“This delinking is for corporate or joint accounts and for activities not associated with breaches. Returns on delinked accounts/wallets (except Tier 1) shall be rendered to the Director, Payments System Management Department on a monthly basis.

“Where there is no linked account, a nil report should be submitted while fraud management is a process aimed at using BVN to deter, prevent, detect and mitigate the risks of fraud in the banking industry.”

A watch-listed individual is barred from entering into new relationship with any bank.

The apex bank said that in a situation that a bank chooses to continue business relationship with an account holder on the watch- list, an account holder shall be prohibited from e-channels, issuance of third-party cheques, shall not provide reference to another customer, shall not be allowed to access credit facility or guarantee credit facilities.Also, individuals shall remain on the watch list for up to 10 years and penalties that applied to such shall apply to their accounts.

The statement added;

“Once a Watch-Listed BVN has served its term on the Watch-List, the Nigerian Interbank Settlement System (NIBSS) shall automatically delist the BVN and notify the stakeholders. Where a bank realised that an individual was placed on the watch-list in error, the bank shall apply in writing, with supporting documents to the Director, Risk Management Department of the CBN, for approval to delist.”

The supporting documents shall be duly authorised by the MD/CEO and the Chief Audit Executive of the bank. Upon approval from CBN, the bank shall forward the approval to NIBSS for delisting. Only the institution that placed an individual on the watch-list can request for such delisting.

The new framework added that it is the responsibility of the CBN to conduct oversight on BVN operations and systems, monitor other stakeholders to ensure compliance, issue circulars to regulated institutions on the operations of the Watch-List, review framework for the operations of the Watch-List, as the need arises and apply appropriate sanctions for non-compliance with the Regulatory Framework.

The NIBSS is expected to collaborate with other stakeholders to develop and review the Standard Operating Guidelines of the BVN, initiate review of Guidelines, as the need arises, subject to the approval of the CBN, ensure seamless operations of the BVN system, maintain the BVN database, ensure adequate security of the BVN information; an maintain an on-line real-time Watch-list Portal.

The Central Bank of Nigeria on Monday, May 8, authorized foreign banks in the country to work with their parent companies in availing and syndicating foreign currency-denominated loans (dollar loans) to Nigerian companies.

The apex bank said the policy aligns with its mandate to promote financial system stability.

In the Guidelines for the Regulation of Representative Offices of Foreign Banks in Nigeria, signed by CBN’s Director of Financial Policy and Regulation Department, Muhammad Musa, it was stated that a bank licensed under any foreign law, whose registered head office is outside Nigeria, or any financial institution licensed under foreign law, whose primary business includes the receipt of deposits, granting of loans and/or provision of current and savings accounts, are covered by the guidelines.

This include foreign-owned operating bank/financial holding company that is foreign-based, that owns controlling interest in one or more banks or institutions whose primary business includes the receipt of deposits, granting of loans and provision of current and savings accounts.

The guidelines are backed by Sections 6(1) and 8 (1) of the Banks and Other Financial Institutions Act 2020 (BOFIA) respectively which states that “no foreign bank shall operate in Nigeria without prior approval of the CBN”.

The banks are also authorized to market the products and services of its foreign parent or an affiliate of the foreign parent licensed and domiciled outside Nigeria.

They can also carry out research activities in Nigeria on behalf of the foreign parent and also serve as a liaison between the foreign parent and local banks, private institutions within Nigeria and other customers of the foreign parent based in Nigeria.

They are also authorized to connect banks and other financial institutions to their parent firm, and assist exporters in Nigeria with information related to the laws and markets of target countries in which the foreign parent or any of the Group’s affiliates has a subsidiary.

Part of the responsibilities includes collating and distributing economic and financial information or country reports to its foreign parents for use by their customers and assisting their customers who desire to invest in Nigeria or do business with Nigerian companies subject to the extant Data Protection Regulations.

They are also authorised to connect exporters with potential customers in jurisdictions where the parent company operates; and assist Nigerian exporters with finding new markets through its international offices.

The CBN added;

“Representative offices are permitted to record revenue, in so far as such revenue does not relate to non-permissible activities as set out in section 3.2 below and emanates from intra-group services rendered to the parent company with such revenue taxed in accordance with transfer-pricing regulations. Revenue in this provision is limited to line items such as staff costs and business premises leasing fees.”

The banks are not allowed to provide services designated in Nigeria as banking business and provide any commercial or trading activity that may lead to the issuance of invoices for services rendered.

In establishing a representative office in Nigeria, the CBN said a Memorandum of Understanding (MOU) between the CBN and the applicant’s home regulatory supervisor is essential.

“Where such an MOU is non-existent, the CBN will work with the home regulatory agency to establish/execute an MOU as soon as possible,” it said.

“Not later than three months after obtaining the Approval-In-Principle, the promoters of a proposed office shall submit an application for the grant of a final license to the CBN,” the apex bank said.

Adon Ikpefan, has advised the Central Bank of Nigeria (CBN) to review the current N25 billion capital base of banks to enable them to compete favourably with their international counterparts.

Mr Ikpefan, from the Department of Banking and Finance, College of Management and Social Sciences, Covenant University, gave the advice during the 29th inaugural lecture of the institution on Monday in Ota, Ogun.

According to him, reforming the financial sector remains a major tool for banking soundness.

He noted that further reviewing the minimum paid-up capital from the present N25 billion for deposit money banks would significantly enhance their performance and capacity for cross-border businesses.

“Nigerian banks need to be proactive and strategically positioned to be active and not spectators in the emerging world to meet international standards and transform the economy,” Mr Ikpefan explained.

The university teacher added;

“In addition, for Nigerian banks to play their proper role in financial services delivery, locally and internationally, the apex bank needs to improve the framework for operations of banks and non-bank financial intermediaries.”

Mr Ikepefan said there was a need for CBN to emphasise good corporate governance to improve the performance of the Nigerian banking sector significantly and urged the regulatory authorities to embrace policies aimed at controlling inflation and prioritise fostering financial intermediation, adding that fiscal and monetary policies designed to promote output stability and sustainable growth were good for financial intermediation.

He stressed the need for banks’ management and regulatory authorities to create digital banking awareness to promote financial inclusion.

Mr Ikpefan called on the leadership of banks to address mismanagement and fraud, which posed a great threat to the financial health of banks.

The National Association of Microfinance Banks (NAMB) has renewed its call on the Central Bank of Nigeria (CBN) to always involve MfBs in formulating and implementing key policies.

“CBN’s naira redesign policy was desirable for the country, but non-integration of the MfBs in the policy formulation and implementation caused serious hardships for the banks and their customers,” the financial association stated.

The association also urged the apex bank to involve microfinance banks in other measures to enhance the nation’s financial system stability and sustainable growth.

It made the call in the communiqué issued at the end of its emergency board of trustees meeting recently in Abuja, signed by the chairman, Ibrahim Bamalli, and secretary, Dan Ogun.

The NAMB BOT called on the CBN to help improve public confidence in the microfinance banking subsector and position the MfBs for improved contributions to the nation’s gross domestic product (GDP).

“We recall that the implementation of the cashless and naira redesign policies created some challenges for MfBs that seriously threatened many member banks, with attendant negative implications,” added the association.

It also tasked MfBs and other relevant stakeholders to be involved in implementing policies of urgent importance to forestall the crisis that recently characterised the implementation of the naira redesign policy.

It also tasked its member banks on internal cleansing and self-regulation required to position them better to impact the economy.

It urged MfBs to embrace digitalisation by committing adequate investments to critical e-channel infrastructure for enhanced operations.