Daily Champion (Lagos)
Comfort Ekeleme
27 October 2009
Stakeholders in the legal profession have called on the Central Bank of Nigeria (CBN) to workout a comprehensive effective legal framework to save the financial sector from further liquidity pressure.
In addition, they argued that a strong legal framework would guide against abuse of the gains of the on going reforms in banking industry.
The Stakeholders who participated in the just concluded Nigerian Economic Summit Group (NESG) held in Lagos at the weekend noted that the problems currently faced by the nation's financial sector were as a result of weak institutions and complete failure of the legal framework on the side of the regulatory authorities.
Also speaking , a Senior Advocate of Nigeria (SAN), Olisa Agbakoba said the identified problems in the sector were as a result of poor legal strategy, adding that there was need to have an effective banking supervision. He however charged CBN to allow the banks to concentrate more on the issues of credit facilities.
He harp on the need for the CBN governor to have a financial services ombudsman, strong law on risk management and strong corporate governance, stressing that presently there is no legal framework backing the action of the apex bank in its on going reforms.
Agbokoba also said there was equally need for risk management training in the industry, emphasizing that it should be timely addressed in order to avoid further mistake on the part of the banks and the regulatory bodies.
While canvassing the importance of sound credit reporting in the sector to guide the bankers, he noted that the second phase of the reform must be integrated with legal analysis. "There is nee to rebuild the nation's financial services framework. What happened in the first phase of the sanitization was in order but the next phase requires proper legal analysis."
In her contribution, Managing Director of SKOA Chair Centre, Mrs. Ibukun Awosika, said the on going banking sector reform has to a great extent revealed a breakdown of social values, with issue of trust being breached. She said the banking supervisor from the apex bank should equally be brought to book along side bank chiefs and debtors.
The CBN Governor, Mallam Sanusi Lamido Sanusi, said everything the regulatory body had done was under the existing Nigerian law, "sometimes it is not about the law but implementation."
On the issue of margin loans, Sanusi noted that there is existing regulations about margin loans. He said it had been his desire even as a banker for the sector to have such regulations. "We are now experimenting what other banks around the world had done; if we had done it when other countries were doing it nobody would have noticed it. We all made a mistake, what I am interested on now is how do we transform the banking industry to strong institutions.
"The option would have been to allow the banks to die. Nigeria should grow above criticisms; a banking license is not a fundamental human right, it is a privilege. CBN gives you a license on the condition that you will operate within its law, if you deviates the license will be withdrawn. It is not a secret that Mr. President is a shareholder in bank PHB, and the bank should be dealt with accordingly", Sanusi said.
On the issue of common year end, for banks, the CBN boss said that his administration was strongly committed to making it, a reality.
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