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Section 43, 44, 45, 46, 47 and 48 of the Bank and Other Financial Institutions Act 2020 is under Part V (GENERAL AND SUPPLEMENTAL) of the Act.
Section 43 BOFIA 2020
Restriction on the use of certain names
(1) Except with the written consent of the Board of the Central Bank of Nigeria — (a) no bank shall, be registered or incorporated with a tribal or ethnic name or any name which includes the words “Central” “Federal,” Federation, “National”, “Nigeria”, “Reserve”, “State”, “Christian”, “Islamic”, “Muslim”, “Quranic”, or “Biblical”
(b) no person other than a bank licensed under this Act shall use or continue to use the word “bank” or any of its derivatives, either in English or in any other language in the description or title under which the person is carrying on business in Nigeria;
(c) no person with objects to offer payments and or other financial services required by this Act shall be registered by the Corporate Affairs Commission with the word fintech or any of its derivatives either in English or in any other language included in the description or title under which the person is carrying on business in Nigeria.
(2) Every bank shall use as part of its description or title the word “bank” or anyone or more of its derivatives, either in English or in any other language.
(3) Subsection (1) of this section shall not apply to any registered association of banks, bankers or bank employees formed for the protection of their mutual interest or in furtherance or promotion of education and training of personnel of financial institutions in Nigeria.
(4) Any person who acts in contravention of this section is guilty of an offence and liable on conviction to a fine of not less than N2, 000,000 and N100, 000 for each day during which the offence continues.
Section 44 BOFIA 2020
General restriction on advertisement
(1) No person other than a bank or any other person authorised to take deposits shall issue any advertisement inviting the public to deposit money with it.
(2) Any person who issues an advertisement in contravention of the provisions of subsection (1) of this section is guilty of an offence and liable on conviction to imprisonment for a term of not less than 5 years or a fine of the higher of N50, 000,000 or two times the cumulative deposits or other amount collected on account of any such advertisement or to both such imprisonment and penalty.
(3) All advertisements issued by any bank shall be in compliance with regulations on advertisements issued by the Bank from time to time.
(4) Any bank which fails to comply with the provisions of subsection (3) of this section shall be liable to a penalty of N5,000,000 and an additional penalty of N100, 000 for each day during which the infraction continues.
(5) In this Act, “advertisement” includes any form of advertising whether in publication or by the display of notice or by means of circular or other documents or by any exhibition of photographs or cinematograph or by way of sound broadcasting or television or loudspeakers or other public address systems or electronic mail or internet or other electronic media.
(6) An advertisement which contains information calculated to lead directly or indirectly to the deposit of money by the public shall be treated as an advertisement inviting the public to deposit money.
(7) An advertisement issued by any person on behalf of or to the order of another person shall be treated as an advertisement issued by that other person and for the purpose of any proceedings under this Act, an advertisement inviting the public to deposit money with a person specified in the advertisement shall be presumed, unless the contrary is proved, to have been issued by the person.
Section 45 BOFIA 2020
Closure of bank during a strike, an epidemic or pandemic
(1) No bank, specialised bank or other financial institution shall incur any liability to any of its customers by reason only of failure on the part of the bank, specialised bank or other financial institution to open for business during a strike, an epidemic or pandemic.
(2) If as a result of a strike, an epidemic or pandemic, a bank, specialised bank, or other financial institution fails to open for business, the bank specialised bank or other financial institution shall, within 24 hours of the beginning of the closure, obtain the approval of the Bank for any continued closure.
Section 46 BOFIA 2020
Prohibition of the receipt of commissions etc by staff of banks
(1) Any director, manager, officer or employee of a bank or any other person receiving remuneration from the bank, who solicits, receives, consents or agrees to receive any gift, commission, employment, service, gratuity, money, property or thing of value for his own personal benefit or advantage or for that of any of his relations, from any person — (a) for procuring or endeavouring to procure for any person any advances, loans or credit facility from the bank; or (b) for the purpose of the purchase or discount of any draft, note, cheque, bill of exchange or other obligation by that bank; or (c) for permitting any person to overdraw any account with that bank without proper authority or compliance with rules and guidelines for that purpose; or (d) for any other service rendered in line with his duty as an employee of the bank; is guilty of an offence and liable on conviction to a fine of N5, 000,000 or imprisonment for a term of 5 years or to both such fine and imprisonment and in addition any such gift or other commission shall be forfeited to the bank.
(2) The provisions of subsection (1) of this section shall not in any manner derogate from, and shall be without prejudice to any other written law relating to corruption or illegal gratification.
Section 47 BOFIA 2020
Disqualification and Exclusion of Certain Individuals from Management of Banks
(1) Every bank shall, before appointing any director, chief executive, or management staff of such grades may be specified from time to time by the Bank seek and obtain the Bank’s written approval for the proposed appointment.
(2) No bank, shall employ or continue the employment of any person as a director, manager, secretary or an officer who — (a) is of unsound mind or as a result of ill health is incapable of carrying out his duties; or (b) is dismissed from the service of the Federal, State or Local Government or any of the agencies of such government; or (c) is declared bankrupt or suspends payments or compounds with his creditors including his bankers; (d) is convicted of any offence involving dishonesty or fraud; or (e) is guilty of serious misconduct in relation to his duties; or (f) in the case of a person who possesses a professional qualification, is disqualified or suspended otherwise than of his own request) from practicing his profession by the order of any competent authority made in respect of him personally.
(3) No person who has been a director of or directly concerned in the management of a bank which has been wound up by the Federal High Court shall, without the express authority of the Governor, act or continue to act as a director of, or be directly concerned in the management of any other bank.
(4) Any person whose appointment with a bank has been terminated or who has been dismissed for reasons of fraud, dishonesty or convicted for an offence involving dishonesty or fraud shall not be employed by any bank in Nigeria.
(5) The Bank shall have power to remove from office any person to whom any of the provisions of subsection (2) of this section applies
Provided that in the case of paragraphs (b) to (f), the Bank may also prohibit any such person from serving on the Board of, or from managing, or from being employed by any institution under its supervision.
(6) Any bank which acts in breach of this section has committed an infraction and is liable to a penalty of not less than N5,000,000 and an additional N100,000 for each day during which the infraction continues.
(7) Where a bank is in breach of this section with the knowledge or connivance of any director, manager, secretary or any other officer of the bank, such officer, shall be liable to a penalty of not less than N2,000,000.
(8) Every institution regulated under this Act shall be required to submit to the Bankers’ Committee Secretariat or any other body or office designated by the Bank, not later than two weeks after the date of termination or dismissal of any staff, the name, designation, reasons for termination or dismissal and any other information that may be required by the Bankers’ Committee Secretariat.
(9) It shall not be a defence for any director, manager or officer of a bank to claim that he is not aware of the provisions of subsection (4) of this section, unless such director, manager or officer can prove that prior clearance had been obtained for such a person from the Secretary of the Bankers’ Committee Secretariat who maintains a register of terminated, dismissed or convicted staff of banks on the ground of fraud or dishonesty.
Section 48 BOFIA 2020
Offences by Companies, etc. and by servants and agents
(1) Where any offence against any provision of this Act has been committed by a body corporate or firm, any person who was a director, manager, secretary or other similar officer of the body corporate or firm purporting to and in such capacity shall, in addition to the body corporate or firm, be deemed to be guilty of that offence unless he proves that the offence was committed without his consent or connivance and that he exercised all such diligence to prevent the commission of the offence as he ought to have exercised having regard to the nature of his functions in that capacity and to all the circumstances.
(2) Where any person would be liable under this Act to any punishment or penalty for any act, omission, neglect or default, he shall be liable to the same punishment or penalty for every such act, omission, neglect or default of any clerk, servant or agent of the clerk or servant of such agent:
Provided that such act, omission, neglect or default was committed by the clerk or servant in the course of his employment or by the agent when acting in the course of his employment in such circumstances that has the act, omission, neglect or default been committed by the agent, his principal would have been liable under this section.
Section 34, 35, 36, 37, 38, 39, 40, 41, and 42 of the Bank and Other Financial Institutions Act 2020 is under Part IV (FAILING BANKS AND RESCUE TOOLS) of the Act.
Section 34 BOFIA 2020
Intervention Powers in Failing Bank
(1) Where a bank informs the Bank that – (a) it is likely to become unable to meet its obligations under this Act; (b) it is about to suspend payment to any extent; (c) it is insolvent; or (d) where, after an examination under section 33 of this Act or otherwise howsoever, the Bank is satisfied that the bank is in a grave situation as regards the matter referred to in section 33(1) of this Act, the Governor may by order in writing exercise any one or more of the powers specified in subsection (2) of this section.
(2) The Governor may by an order in writing under subsection (1) of this section (a) prohibit the bank from extending any further credit facility for such period as may be set out in the order, and make the prohibition subject to such exceptions, and impose such conditions in relation to the exceptions as may be set out in the order, and from time to time, by further order similarly made, extend the aforesaid period; (b) suspend any payment or delivery obligations pursuant to any contract to which the bank is a party; (c) require third party service providers to the bank, to continue to provide services to the bank for such period as may be set out in the order; (d) require the bank to take any steps or any action or to do or not to do any act or thing whatsoever, in relation to the bank or its business or its directors or officers which the Bank may consider necessary and which is set out in the order, within such time as may be stipulated therein; (e) remove for reasons to be recorded in writing with effect from such date as may be set out in the order, any manager or officer of the bank, notwithstanding anything in any written law or any limitations contained in the memorandum and articles of association of the bank; (f) notwithstanding anything in any written law or any limitations contained in the memorandum and articles of association of the bank, and in particular, notwithstanding any limitation therein as to the minimum or maximum number of directors, for reasons to be recorded in writing (i) remove from office, with effect from such date as may be set out in the order, any director of the bank; or (ii) appoint any person or persons as a director or directors of the bank and provide in the order, for the person or persons so appointed to be paid by the bank such remuneration as may be set out in the order.
(g) appoint any person to advise the bank in relation to the proper conduct of its business, and provide in the order, for the person so appointed to be paid by the bank such remuneration as may be set out in the order;
(h) transfer the bank or the whole or part only of the banking business of the bank to third party private purchasers; or (i) employ any other intervention tools as the Bank may deem fit.
(3) Without prejudice to the provisions of subsection (2) of this section, and notwithstanding the provisions of section 34 of the Central Bank of Nigeria Act or anything in any written law or contract or any limitations contained in the memorandum and articles of association of any bank, the Bank shall have power at any time to acquire the shares of any failing bank up to a level that guarantees its control by the Bank: Provided that the Bank shall dispose of such equity investment in the bank at the earliest suitable time.
(4) If after taking any or all of the steps stipulated in subsection (2) of this section or such other measures as in the opinion of the Bank may be appropriate in the circumstance including but not limited to the measures and steps under sections 37– 42 of this Act, the state of affairs of the bank concerned does not improve, the Bank may invoke its power to revoke the licence of the bank under section 12 of this Act.
Section 35 BOFIA 2020
Application to the Federal High Court for winding up
Where the license of a bank has been revoked pursuant to section 39 of this Act, the Corporation shall apply to the Federal High Court for a winding up order of the affairs of the bank
Section 36 BOFIA 2020
Cooperation, etc with Bank in Banking Crisis
(1) Notwithstanding the provisions of any other enactment, relevant agencies shall cooperate with, render such assistance, grant such waivers or forbearances as may be required by the Governor which in the opinion of the Governor are necessary or expedient to resolve a banking crisis occasioned whenever two or more of the following conditions occur: (a) banks that are critically distressed control 12.5 per cent or more of the total assets in the industry; or (b) 12.5 per cent or more of total industry deposits are threatened; or (c) 12.5 per cent or more of the banking system’s total loans are non-performing; or (d) 25 per cent or more of banks have applied for liquidity support in excess of 50 per cent of the aggregate takings from the Bank’s window or total interbank funds in the market or have been suspended by their settlement banks for failure to meet clearing obligations:
Provided that the Governor may vary the conditions set out in (a) to (d) above or prescribe such other conditions as the Governor may deem fit.
(2) For the purpose of this section, relevant agencies include: (a) the Federal Ministry of Finance, Budget and National Planning; (b) the Nigeria Deposit Insurance Corporation; (c) the Corporate Affairs Commission; (d) the Federal Inland Revenue Service; and (e) any other ministry, department or agency as may be determined by the Governor.
Section 37 BOFIA 2020
Bail-in of a Failing Bank, Specialised Bank or Other Financial Institution
(1) Without prejudice to the provisions of section 34 of this Act or any other provision of this Act and notwithstanding anything to the contrary in any law or contract, the Bank may take the additional measures provided for in this Part as it may deem necessary in respect of a failing bank, specialised bank or other financial institution
(2) For the purpose of rescuing a failing bank, specialised bank or other financial institution, the Bank may, subject to subsection (3) of this section, make a determination that any eligible instrument issued by a bank, specialised bank or other financial institution or to which a bank, specialised bank or other financial institution is a party or is subject, should- (a) be cancelled; (b) be modified, converted or changed in form; or (c) have effect as if a right of modification, conversion or change of its or their form had been exercised.
(3) The Bank may make a determination pursuant to subsection (2) of this section if the Bank is of the opinion that – (a) the eligible instrument or instruments ought to be bailed-in to facilitate the rescue of the bank, specialised bank or other financial institution; or (b) the available assets of the bank, specialised bank or other financial institution do not, or are unlikely to support the payment of its liabilities, as they become due and payable.
(4) The Bank may, before making a determination pursuant to subsection (2) of this section, appoint one or more persons — (a) to perform an independent assessment of the extent to which the acts mentioned in subsection 2(a), (b) and (c) of this section should be carried out for all or any eligible instruments; and; (b) to furnish the Bank with a report on the assessment.
(5) The remuneration and expenses of any person appointed under subsection 4(a) of this section are to be paid by the bank, specialized bank or other financial institution on which the assessment is conducted.
Section 38 BOFIA 2020
Bail–in Certificate
(1) Upon delivery of the report of assessment pursuant to section 37(4)(b) of this Act, the Governor shall, as soon as practicable, issue a bail-in-certificate.
(2) The bail-in certificate comes into effect on such date as the Governor may determine by a written instrument or notice (hereinafter referred to as “the appointed date”).
(3) The bail-in certificate may make provision for one or more of the following: (a) the cancellation of one or more eligible instruments; (b) the modification, conversion, or change in the form of one or more eligible instruments; (c) that one or more eligible instruments is or are to have effect as if a right of modification, conversion or change of its or their form had been exercised under it or them; (d) where provision under paragraph (c) is made, the details of the modification, conversion or change of the form of the eligible instrument or instruments; and/or (e) incidental, consequential and supplementary matters, including a requirement that the bank or any other person must comply with a general or specific direction set out in the bail-in certificate.
(4) The bail-in certificate must specify the following information- (a) the name of the bank, specialised bank or other financial institution; (b) where the certificate provides for the cancellation of one or more eligible instruments issued by the bank, specialised bank or other financial institution, or to which it is a party or is subject, details of the eligible instrument or instruments to be cancelled, including the types or classes of eligible instrument or instruments; (c) where the certificate provides for the modification, conversion, or change in form of one or more eligible instruments issued by the bank, specialised bank or other financial institution or to which it is a party or is subject, details of the eligible instrument or instruments to be modified, converted, or changed in form, including the types or classes of eligible instrument or instruments.
(5) The bail-in certificate may: (a) make provisions generally or only for specified purposes, cases or circumstances; and (b) make different provisions for different purposes, cases or circumstances.
(6) The Governor may, at any time before the appointed date, add to, vary or revoke any matter specified in the bail-in certificate.
(7) A provision in a bail-in certificate has effect despite any restriction arising by reason of written contract or any law in force before the appointed date of the bail-in certificate.
(8) Where a bail-in certificate provides for the cancellation, modification, conversion, or change in the form of an eligible instrument, or that an eligible instrument is to have effect as if a specified right had been exercised under it – (a) the cancellation, modification, conversion, or change in form takes effect or the eligible instrument has effect as if the specified right had been exercised under it from (and including) the appointed date, without other or further act by the bank, specialised bank or other financial institution; and (b) the certificate has effect according to its tenor and is binding on any person affected by it.
(9) A person that fails to comply with any direction in the bail-in certificate is guilty of an offence and shall be liable in the case of an individual, to imprisonment for a term of not less than 6 months or to a fine of not less than N2,000,000 or to both such imprisonment and fine.
Section 39 BOFIA 2020
Moratorium and regulations on Bail-In eligible instruments
(1) Subject to any other provisions of this Act, all claims, judgment debt enforcement, in respect of an eligible instrument existing or being pursued as of the date on the bail-in certificate, shall automatically be suspended and be unenforceable against the bank, specialised bank or other financial institution during the period covered by the Bail-in certificate, or any period as may be determined by the Governor by a written notice.
(2) To ensure the effective operation of the provisions of this section, the Bank may make regulations to impose a requirement on a bank, specialised bank or other financial institution to ensure that the contract governing the eligible instrument contains a provision to the effect that the parties to the contract agree for the eligible instrument to be the subject of a bail-in certificate and that the parties agree to be bound by a bail-in certificate issued by the Bank in pursuant to sections 37 and 38 of this Act.
(3) The regulations which the Bank is empowered to make under subsection (2) of this section may – (a) specify the eligible instruments or class of eligible instruments, and banks, specialised bank or other financial institution to which the requirement applies; and (b) provide for incidental, consequential or transitional matters.
(4) In exercising any power under this section, the Bank may have regard to the desirability of giving each pre-resolution creditor or pre-resolution shareholder of a financial institution the priority and treatment the pre-resolution creditor or pre-resolution shareholder would have enjoyed had the financial institution been wound up.
(5) In determining whether to exercise its powers in accordance with the priority and treatment a pre-resolution creditor or pre-resolution shareholder of a financial institution would have enjoyed had the financial institution been wound up, the Bank may consider the following- (a) any widespread adverse impact that the bank’s failure would have on the financial system in Nigeria or the economy of Nigeria, or both; (b) the need to maximise value for the benefit of all creditors of the bank, specialised bank or other financial institution as a whole; (c) public interest; and (d) any other matter that the Bank considers relevant.
(6) For the purposes of this Part of this Act, “eligible instrument” means: (i) any equity instrument or other instrument that confers or represents a legal or beneficial ownership in the bank, except an ordinary share; (ii) any unsecured liability or other unsecured debt instrument that is subordinated to unsecured creditors’ claims of the bank, specialised bank or other financial institution that are not so subordinated; or (iii) any instrument that provides for a right for the instrument to be written down, cancelled, modified, changed in form or converted into shares or another instrument of ownership, when a specified event occurs.
(7) For the purposes of this section, a reference to cancelling an eligible instrument includes cancelling it in whole or in part, and a reference to modifying, converting, or changing the form of an eligible instrument is a reference to – (a) converting the whole or a part of the eligible instrument from one form or class to another; (b) replacing the whole or a part of the eligible instrument with another instrument or liability of a different form or class; (c) creating a new instrument (of any form or class) or liability in connection with the modification of the eligible instrument; or (d) converting the whole or a part of the eligible instrument into shares or other similar instrument issued by any resulting bank, specialised bank or other financial institution.
Section 40 BOFIA 2020
Termination of rights
(1) This section applies to a contract, where one of the parties, is- (a) a bank that is the subject or proposed subject of a resolution measure; or (b) an entity that is part of the same group of companies as that of a bank where — (i) the bank is the subject or proposed subject of a resolution measure; (ii) the contract has a termination right that is exercisable if the bank becomes insolvent or is in a certain financial condition; and (iii) the obligations of the entity under the contract are guaranteed or otherwise supported by the bank.
(2) The Bank may, by notice in writing under the hand of the Governor, suspend the exercise of any termination right in a contract to which sub-section (1) of this section applies for a specified period.
(3) A notice pursuant to subsection (2) of this section- (i) may relate to all or a class only of the contracts to which subsection (1) of this section applies; (ii) may make different provisions for different classes of contracts to which subsection (1) of this section applies; and (iii) may be of general or specific application.
(4) When exercising a power under subsection (2) of this section, the Bank must have regard to its impact on the safe and orderly functioning of the financial market and financial market infrastructures operating in Nigeria.
(5) A suspension by notice under this section, takes effect from (and including) the time of publication of the notice.
(6) During the period of suspension of a termination right under a contract and despite any provision of a written law or contract, any purported exercise of that right has no effect.
(7) A person whose termination right under a contract is suspended shall not, without the prior written consent of the Bank, exercise that right before the expiry of the suspension.
(8) On the expiry of the suspension period of a termination right under a contract, the person who holds that right may exercise the right in accordance with the terms of the contract, but not on any of the following grounds: (a) a resolution measure taken in relation to the bank; (b) the occurrence of an event directly linked to such resolution measure; or (c) if the contract forms part of any business of the bank that has been transferred to another person pursuant to the provisions of this Act.
Section 41 BOFIA 2020
Asset separation tool
(1) Notwithstanding anything contained in any law or in any contract or instrument, the Bank may transfer the assets of a bank, specialised bank or other financial institution to one or more private asset management vehicles, and for this purpose, the Bank may issue instruments transferring any of that property.
(2) The transfer referred to in subsection (1) of this section shall take place without obtaining the consent of the shareholders of the bank, specialised bank or other financial institution or any third party other than the private asset management vehicle, and without complying with any procedural requirements under any law or written contract.
(3) The Bank or such person as may be directed by the Bank, shall determine the consideration for which assets are transferred to the private asset management vehicle and such consideration may be paid in the form of debt issued by the private asset management vehicle; provided that nothing in this subsection (3) of this section, shall prevent such consideration from having a nominal or negative value.
(4) The Bank may for the purposes of subsection (1) of this section, issue an instrument of transfer to the private asset management vehicle:
Provided that nothing in this section shall be construed as precluding the Bank from directing that the private asset management vehicle transfers the assets back to the bank, specialised bank or other financial institution and the bank, specialised bank or other financial institution shall be obliged to take back any such assets.
(5) Shareholders or creditors of the bank, specialised bank or other financial institution and other third parties shall not enforce any right, judgment or claim howsoever described against the assets transferred to the private asset management vehicle.
(6) The private asset management vehicle shall manage the assets transferred to it with a view to maximizing their value for an eventual sale or organized and measured winding-up.
(7) The obligations of a private asset management vehicle under this section shall not imply any duty or responsibility to shareholders or creditors of the bank, specialised bank or other financial institution and the management of a private asset management vehicle shall have no liability to such shareholders or creditors for acts and omissions in the discharge of their duties unless in the case of fraud or gross misconduct which directly affects the rights of such shareholders or creditors.
Section 42 BOFIA 2020
Sale of business tool
(1) The Bank shall have the power to transfer to a purchaser – (a) shares or other instruments of ownership issued by the bank; and (b) all or any assets, rights or liabilities of the bank.
(2) A transfer made pursuant to this section shall be made on commercial terms, and the Bank shall take all reasonable steps to obtain commercial terms for the transfer, having regard to the circumstances.
Section 23 to 33 of the Bank and Other Financial Institutions Act 2020 is under Part III (BOOK AND RECORDS OF ACCOUNT) of the Act.
Section 23 BOFIA 2020
Proper books and records of account
(1) Every bank shall cause to be kept proper books of account with respect to all the transactions of the bank.
(2) For the purpose of subsection (1) of this section, proper books of account shall be deemed to be kept with respect to all transactions, if such books as are necessary to explain such transactions and give a true and fair view of the state of affairs of a bank are kept by the bank and are in compliance with the accounting standards as may be prescribed for banks by relevant authorities.
(3) The books of account shall be kept in English language at the principal administrative office of a bank and at each branch of the bank.
(4) Where the books of account, kept by a bank with respect to all its transactions, are prepared and kept in such a manner that, in the opinion of the Bank, have not been properly prepared and kept, or where a bank renders returns in accordance with the provisions of section 24 of this Act, which in the opinion of the Bank are inaccurate, the Bank may appoint a firm of qualified accountants to prepare proper books of account or render accurate returns, as the case may be, for the bank and the cost of preparing the accounts and rendering the returns shall be borne by the bank.
(5) If any person being a director, manager or officer of a bank — (a) fails to take all reasonable steps to secure compliance with any of the provisions of this section; or (b) has by willful act been the cause of any default thereof by the bank, such director, manager or officer shall be liable, in respect of paragraph (a) of this subsection, to a penalty of not less than N2,000,000 and in respect of paragraph (b) of this section, shall be guilty of an offence and liable on conviction to a term of imprisonment of not less than 5 years or to a fine of not less than N5,000,000 or to both such imprisonment and fine.
Section 24 BOFIA 2020
Returns by banks
(1) Every bank shall submit to the Bank not later than 5 days after the last day of each month or such other interval as the Bank may specify, a statement showing— (a) the assets and liabilities of the bank; and (b) an analysis of advances and other assets, at its head office and branches in Nigeria and branches and subsidiaries outside Nigeria, in such form as the Bank may specify, from time to time.
(2) Every bank shall submit such other information, documents, statistics or returns as the Bank may deem necessary.
(3) Where a bank is affiliated to any other person, the Bank may require such bank to prepare and furnish any return required to be made under this Act or the Central Bank of Nigeria Act on a consolidated basis.
(4) The word “affiliated” as used in this section includes a subsidiary or holding company or such other relationship as may be determined from time to time by the Bank.
(5) The statements and information submitted by a bank under this section shall be regarded as confidential: Provided that the Bank may furnish any such statement or information to any agency of Government as required by law.
(6) Any bank which fails to comply with any of the requirements of this section is, in respect of each such failure, liable to a penalty of not less than N5,000,000 and N500,000 for each day during which the infraction continues.
Section 25 BOFIA 2020
Publication of consolidated statements
Notwithstanding anything in section 24 of this Act, the Bank may prepare and publish consolidated statements aggregating the statements furnished under section 24 of this Act for each category of banks.
Section 26 BOFIA 2020
Publication of consolidated statements
(1) A bank or other financial institution shall not later than three months after the end of its financial year, forward to the Bank for approval to publish, its financial statement which shall be prepared in accordance with the relevant accounting standards as may be prescribed by the relevant authorities, and in the case of a non-interest bank, an independent report of the advisory committee of experts on the compliance status of the bank’s activities with noninterest banking principles shall, additionally be furnished.
(2) Every bank or other financial institution shall thereafter but not later than 7 days after approval for publication by the Bank — (a) cause to be published in not less than 2 national daily newspapers printed and circulating in Nigeria; (b) exhibit in a conspicuous position in each of its offices, branches and website; and (c) forward to the Bank, copies of the bank’s published Statement of Financial Position and Statement of Profit and Loss and Other Comprehensive Income duly signed with the full names of the directors of the bank who signed the financial statements, and in the case on a non-interest bank, a copy of the report of its advisory committee of experts.
(3) Every published account of a bank, under subsection (2) of this section, shall disclose in detail, penalties paid for the contravention of the provisions of this Act or any policy or guidelines in force during the financial year and the auditor’s report shall reflect such contraventions.
(4) The Statement of Financial Position and Statement of Profit or Loss and Other Comprehensive Income of a bank shall bear on their face the report of an approved auditor and shall contain statements on such matters as may be specified by the Bank, from time to time.
(5) For the purpose of subsection (4) of this section, an “approved auditor” shall be an auditor approved for the purpose of section 28 of this Act.
(6) Any bank which fails to comply with any of the requirements of this section is, in respect of each such failure, liable to a penalty of not less than N5,000,000 and an additional penalty of N100,000 for each day the infraction continues.
Section 27 BOFIA 2020
Contents and form of accounts
(1) The Statement of Financial Position and Statement of Profit or Loss and Other Comprehensive Income of a bank shall give a true and fair view of the state of affairs of the bank as at the end of the reporting period.
(2) The Statement of Financial Position and Statement of Profit or Loss and Other Comprehensive Income of a bank forwarded to the Bank in accordance with the provisions of section 26 of this Act shall comply with the requirements of any circular which has been issued by the Bank thereon.
(3) Any person being a director of any bank who fails to take all reasonable steps to secure compliance with any of the provisions of this section in respect of any accounts is guilty of an offence and liable on conviction to a fine of not less than N2,000,000 and in addition the Governor may suspend or remove any such director from office. Provided that the Bank shall have power to direct in appropriate cases:
Section 28 BOFIA 2020
Appointment, power and report of approved auditor
(1) Subject to the approval of the Bank, every bank shall appoint a firm of Auditors, referred in this section as, “the approved auditor,” whose duties shall be to present to the shareholders a report of the annual Statement of Financial Position and Statement of Profit or Loss and Other Comprehensive Income of the bank and every such report shall contain statements as to the matters pertaining thereto and such other information as may be prescribed, from time to time, by the Bank: (a) the appointment of more than one firm of Auditors for any bank which shall act jointly in auditing the bank’s Statement of Financial Position and Statement of Profit or Loss and Other Comprehensive Income and all expenses and fees of the Auditors shall be borne by such bank; and (b) the removal of an auditor of a bank, who in the opinion of the Bank, is not discharging its functions effectively.
(2) Where, for any reason, an auditor ceases to act for a bank, the bank shall within 14 days of the cessation, appoint another auditor and obtain the approval of the Bank for the appointment.
(3) Where, an auditor ceases to act for any bank, it shall within 7 days of the cessation inform the Bank of the fact of and reason for the cessation.
(4) For the purpose of this section, the approved auditor shall be — (a) an auditor who is ― (i) a member of one of the relevant professional bodies recognised in Nigeria; (ii) approved by the Bank; (iii) resident in Nigeria; and (iv) carrying on professional practice in Nigeria as accountant and auditor; or (b) a firm comprising persons to whom paragraph (a) of this subsection applies.
(5) Any person — (a) having any interest in a bank otherwise than as a depositor; or (b) who is a director, significant shareholder, officer or agent of a bank; or (c) which is a firm in which a director or significant shareholder of a bank has any interest as partner or director; or (d) who is indebted to a bank, shall not be eligible for appointment as the approved auditor for that bank and a person appointed as such auditor who subsequently — (i) acquires such interest; or (ii) becomes a director, significant shareholder, officer or agent of that bank; or (iii) becomes indebted to a partner in a firm in which a director or significant shareholder of a bank is interested as partner or director shall cease to be such auditor.
(6) An approved auditor shall be appointed for a period of not more than 10 years and shall not be eligible for reappointment until a period of 10 years has elapsed after each appointment. Provided that the Bank shall have power to determine and prescribe the tenure of approved auditors from time to time.
(7) If any bank — (a) fails to appoint an approved auditor under subsection (1) of this section; or (b) at any time, fails to fill a vacancy for such person, the Bank shall appoint a suitable person for that purpose and shall fix the remuneration to be paid by the bank to such auditor.
(8) Every approved auditor of a bank shall have a right of access at all times to the books, accounts, vouchers and all records of the bank, and shall be entitled to require from directors, managers and officers of the bank, such information and explanation as such auditor thinks necessary for the performance of such auditor’s duties under this Act.
(9) The report of the approved auditor shall be read together with the report of the board of directors at the annual general meeting of the shareholders of the bank and two copies of each report together with the auditor’s analysis of bad and doubtful advances in a form specified, from time to time, by the Bank shall be sent to the Bank.
(10) The approved auditor shall immediately report to the Bank if such auditor is satisfied that — (a) there has been a contravention of this Act or that an offence under any other law has been committed by the bank or any other person; or (b) losses have been incurred by the bank which substantially reduce its capital funds; or (c) any irregularity which jeopardises the interest of depositors or creditors of the bank, or any other irregularity has occurred; or (d) he is unable to confirm that the claims of depositors or creditors are covered by the assets of the bank.
(11) The approved auditor shall forward to the Bank two copies of the domestic reports on the bank’s activities not later than 3 months after the end of the bank’s financial year.
(12) Any approved auditor under this section who acts in contravention of or fails deliberately or negligently to comply with any of the provisions of this section is guilty of an offence and liable on conviction to a fine of not less than N2,000,000 and where the approved auditor is a firm, the individual partner or partners shall, in addition, be liable on conviction to imprisonment for a term of not less than 3 years or a fine of not less than N2,000,000 or to both such imprisonment and fine.
(13) The appointment of an approved auditor shall not be determined by a bank without the prior approval of the Bank.
Section 29 BOFIA 2020
Relationship with Specialised banks and finance houses
(1) Notwithstanding anything to the contrary contained in this Act or in any other enactment, the Bank shall have and exercise regulatory and supervisory power over banks, other financial institutions and specialised banks to the exclusion of any other agency or institution. Provided that the Bank may share information on banks, other financial institutions or specialised banks with other agencies or institutions or permit such other agencies or institutions to have access to the books and records of banks, other financial institutions or specialised banks subject to the conditions set out in subsection (4) of this section or such other or additional conditions as the Bank may from time to time determine.
(2) Without prejudice to section 64 of this Act, where a bank, other financial institution or specialised bank is affiliated to any other entity, the Bank shall have power to supervise such bank, other financial institution or specialised bank and all entities affiliated with such bank, other financial institution or specialised bank on a consolidated basis.
(3) For the purposes of subsection (1) of this section, the word ‘affiliated’ shall have the same meaning ascribed to it under subsection (4) of section 24 of this Act.
(4) For the purpose of this section, the Governor may appoint examiners who shall – (a) under condition of confidentiality, examine periodically, the books and affairs of each bank, other financial institutions and specialised banks; (b) have a right of access at all times, to the books, accounts and vouchers of banks, other financial institutions and specialised banks; (c) have power to require from directors, managers and officers of banks, other financial institutions and specialised banks such information and explanation as they deem necessary for the performance of their duties; and (d) have the right to attend (as observers) management and board meetings of banks, other financial institutions or specialised banks to which they are assigned.
(5) Every bank, other financial institutions or specialised bank shall produce to the examiners at such times as the examiners may specify, all books, accounts documents and information which they may require.
(6) If a bank, other financial institution or specialised bank fails to produce any book, document or information in accordance with the requirement of an examiner under this section or under section 31 of this Act, or produces or furnishes to an examiner, any book, document or information that is false in any material particular, the bank, other financial institution or specialised bank is liable, in the case of- (a) a bank, to a penalty of not less than N20,000,000 and in addition, to a penalty of N500,000 for each day during which the infraction continues; or (b) other financial institutions or specialised banks, to a penalty of not less than N2,000,000 and an additional penalty of N50,000 for each day during which the infraction continues.
(7) The reports and findings of the Bank together with the recommendations in relation to the specialised banks owned by the Federal Government of Nigeria shall be forwarded to the supervising minister of such specialised bank and at the sole discretion of the Governor, may be forwarded to the President.
(8) Specialised banks and other financial institutions shall be treated in the same manner as banks with respect to the requirements of section 23 of this Act.
Section 30 BOFIA 2020
Conduct Supervision and Competition
(1) Notwithstanding anything to the contrary in this Act or in any other enactment, the Governor shall have power to issue regulations, guidelines and policies to banks, specialised banks and other financial institutions in Nigeria, to – (a) ensure responsible conduct; (b) protect the interests of consumers of products and services of banks, specialised banks and other financial institutions; (c) promote competition in the Nigerian financial system; and (d) engender and sustain public trust and confidence in the use of financial services in Nigeria.
(2) All banks, specialised banks and other financial institutions shall adopt policies to ensure compliance with consumer protection and competition standards and obligations under extant laws, regulations, and to implement appropriate internal controls in that regard.
Section 31 BOFIA 2020
Appointment of Directors with supervisory functions and other examiners
(1) The Governor shall appoint one or more officers of the Bank not below the rank of director, charged with supervisory functions over regulated entities, who shall be known by such title(s) as the Governor may from time to time specify and who shall be responsible, on behalf of the Bank, for the supervision of banks and/or other financial institutions and/or specialised banks as the Governor may from time to time specify.
(2) The director or directors appointed pursuant to subsection (1) of this section shall have the power to carry out supervisory duties in respect of banks, other financial institutions and specialised banks, as the Governor may specify and for that purpose shall- (a) under conditions of confidentiality, examine periodically the books and affairs of each bank, other financial institution or specialised bank; (b) have a right of access at all times to the books, accounts and vouchers or like documents howsoever described of banks, other financial institutions and specialised banks; (c) have power to require from directors, managers and officers of banks, other financial institutions and specialised banks such information and explanation as the Governor deems necessary for the performance of their duties under this section.
(3) The Governor shall appoint to assist the director(s) appointed pursuant to subsection (1) of this section such other officers of the Bank as the Governor may, from time to time, determine.
(4) The officers may be designated examiners or have such other titles as the Governor may specify.
(5) For the purpose of this section, references to examiners are references to the director appointed pursuant to subsection (1) of this section and any officer of the Bank appointed pursuant to subsection (3) of this section.
(6) In examining the affairs of any bank, other financial institutions or specialised banks under this Act, it shall be the duty of an examiner at all times to avoid unreasonably hindering the daily business of the bank, specialised bank or other financial institution.
(7) Every bank shall produce to the examiner at such times as the examiners may specify all books, accounts, documents and information which they may require.
Section 32 BOFIA 2020
Examination and report thereon
(1) The Governor shall have the power to direct the officers appointed under section 31 to carry out examinations of banks, other financial institutions and specialised banks including maiden, routine, special and target examinations.
(2) The Governor shall, in the case of routine examination, forward a copy of the report arising from the examination together with the recommendations of the Bank, to the bank, other financial institutions and specialised banks concerned with instruction that it be placed before the meeting of the board of directors of the bank specially convened for the purpose of considering the report and the recommendations thereon.
(3) The bank, other financial institution or specialised bank shall not later than 30 days after receiving the report, convey to the Governor, the reaction of its board of directors to the report and its proposals for implementing the recommendations of the Bank.
(4) Any bank, other financial institution or specialised bank which fails to comply with the provisions of this section shall be liable to a penalty of not less than N5,000,000 and an additional penalty of N100,000 for each day during which the infraction continues in the case of a bank, and of not less than N2,000,000 and an additional penalty of N50,000 for each day during which the infraction continues in the case of a specialised bank or other financial institution and in all cases if the infraction continues for more than 30 days, the Bank may in addition to the penalty, withdraw any privilege or facility granted to that bank, other financial institution of specialised bank.
Section 33 BOFIA 2020
Special Examination
(1) The Governor shall have power to order a special examination or investigation of the books and affairs of a bank, other financial institution or specialised bank where — (a) it is in the public interest so to do; or (b) the bank, other financial institution of specialised bank has been carrying on its business in a manner detrimental to the interest of its depositors or creditors; or (c) the bank, other financial institution of specialised bank has insufficient assets to cover its liabilities to the public; or (d) the bank has been contravening the provisions of this Act or any other relevant laws; or (e) an application is made therefore by — (i) a director or shareholder of the bank, other financial institution or specialised bank: or (ii) a depositor or creditor of the bank, other financial institution or specialised bank:
Provided that in the case of paragraph (e) of this subsection, the Governor may not order a special examination or investigation of the books and affairs of a bank, other financial institution or specialised bank if the Governor is satisfied that it is not necessary to do so.
(2) For the purpose of subsection (1) of this section, the Governor shall have power to appoint one or more qualified persons other than the officers of the Bank to conduct special examination or investigation under conditions of confidentiality, of the books and affairs of a bank, other financial institution or specialised bank.
(3) The Governor shall have power to order that all expenses of or incidental to an examination or investigation be paid by the bank, other financial institution or specialised bank examined or investigated.
Section 15, 16, 17, 18, 19, 20, 21, and 22 of the Bank and Other Financial Institutions Act 2020 is under Part II (DUTIES OF BANKS) of the Act.
Section 15 BOFIA 2020
Maintenance of reserve fund
(1) Every bank shall maintain a statutory reserve fund and shall, out of its net profits for each year after due provision has been made for taxation and before any dividend is declared, where the amount of the reserve fund is — (a) less than the paid-up share capital, transfer to the reserve fund a sum not less than thirty per cent of the net profits; or (b) equal to or in excess of the paid-up share capital, transfer to the reserve fund a sum not less than fifteen per cent of the net profit: Provided that no transfer under this subsection shall be made until all identifiable losses and accumulated losses have been made good.
(2) Any bank which fails to comply with the provisions of subsection (1) of this section is guilty of an offence and liable on conviction to a fine of not less than N2,000,000.
(3) Notwithstanding paragraphs (a) and (b) of subsection (1) of this section, the Bank may, from time to time, specify a different proportion of the net profits of each year, being either lesser or greater than the proportion specified in paragraphs (a) and (b) of subsection (1) of this section to be transferred to the reserve fund of a bank for the purpose of ensuring that the amount of the reserve fund of such bank is sufficient for the purpose of its business and adequate in relation to its liabilities.
Section 16 BOFIA 2020
Restriction of dividend
(1) No bank shall pay dividend on its shares until — (a) all its preliminary expenses, organisational expenses, shares selling commission, brokerage, amount of losses incurred, and other capitalised expenses not represented by tangible assets have been completely written off; (b) adequate provisions have been made to the satisfaction of the Bank, for actual and contingent losses on assets, liabilities, off balance sheet commitments and such unearned incomes as are derivable therefrom; (c) it has complied with any capital ratio requirement as specified by the Bank pursuant to section 13 of this Act; and (d) it has satisfied any other corporate governance and prudential requirements that may be stipulated by the Bank from time to time.
(2) Any director, manager or officer who fails to comply with the requirements of this section of this Act is guilty of an offence and liable on conviction to a term of imprisonment of not less than 3 years or to a fine of not less than N2,000,000 or to both such imprisonment and fine.
Section 17 BOFIA 2020
Disclosure of interest by Directors, Managers and Officers
(1) No manager or any other officer of a bank shall — (a) in any manner whatsoever, whether directly or indirectly, have personal interest in any advance, loan or credit facility; and if the manager or officer has any such personal interest, such manager or officer shall declare the nature of such interest to the bank; or (b) grant any advance, loan or credit facility to any person, unless it is authorised in accordance with the rules and regulations of the bank and in line with the regulations on collateralisation issued by the Bank from time to time.
(2) Any manager or officer who contravenes or fails to comply with any of the provisions of subsection (1) of this section is guilty of an offence under this section and liable on conviction to imprisonment for a term of not less than 3 years or to a fine of not less than N5,000,000 or to both such fine and imprisonment; and in addition, any gains or benefits, accruing to any person convicted under this section by reason of such contravention, shall be forfeited to and vested in the bank.
(3) It shall be the duty of a director of a bank who is in any way, whether directly or indirectly, interested in the grant of an advance, loan or credit facility by the bank, to declare the nature of such interest before the meeting of the board of directors of the bank at which the request for the advance, loan or credit facility is first taken into consideration.
(4) In a case where the director becomes interested in any advance, loan or credit facility after it is granted, the declaration shall be made to the board of directors immediately.
(5) For the purpose of this section, a general notice given to the board of directors of a bank by a director to the effect that such director is a member of a company or firm seeking an advance, loan or credit facility from the bank shall be regarded as a declaration of his interest in the grant of the advance, loan or credit facility which may after the date of the notice, be granted to that company or firm, and shall be deemed to be a sufficient declaration of interest in relation to any such advance, loan or credit facility so granted:
Provided that any such notice shall not have effect unless it is in writing and given at a meeting of the board of directors of the bank which shall be required to do all things reasonably necessary to ensure that it is brought up and read at the next meeting of the board of directors of the bank after it is so given.
(6) It shall be the duty of a director of a bank who is in any way, whether directly or indirectly, interested in the grant of an advance, loan or credit facility with a bank other than the bank in which such person is a director, to declare the nature of such interest in writing to the Bank prior to the grant of the advance, loan or credit facility by that other bank and in a case where the director becomes interested in any advance, loan or credit facility from another bank after it is granted, the declaration shall be made to the Bank immediately.
(7) The provisions of subsections (3) and (6) of this section shall not apply in any case — (a) where the interest of the director consists only of being a person holding less than 5 per cent of the shares of the company which is seeking an advance, loan or credit facility from the bank or such percentage as the Bank may from time to time prescribe; or (b) if the interest of the director may properly be regarded by the Bank as immaterial.
(8) For the purpose of subsection (5) of this section, a general notice given to the board of directors of a bank by a director shall be deemed to be a sufficient declaration of interest in relation to any advance, loan or credit facility, if — (a) the notice specifies the nature and extent of interest in the company or firm; (b) such interest is not different in nature from or greater in extent than the nature and extent specified in the notice at the time any advance, loan or credit facility is made; and (c) the notice is given prior to the meeting of the board of directors of the bank.
(9) Every director of a bank who holds any office or possesses any property, whether directly or indirectly, or who by reason of holding such office or possessing such property, or otherwise howsoever, has duties or interests which might conflict with such director’s duties or interests as a director of a bank, shall declare before a meeting of the board of directors of the bank, the fact and the nature, character and extent of the duties or interest.
(10) The declaration referred to in subsection (9) of this section shall be required to be made at the first meeting of the board of directors of the bank held — (a) after such person becomes a director of the bank; or (b) if already a director, after such person takes office or came into possession of the property.
(11) The secretary of the board of the bank shall cause to be brought up and read any declaration made under subsection (3), (8) or (9) of this section at the next meeting of the board of directors of the bank after it is made and shall record any declaration made under this section of this Act in the minutes of the meeting at which it was made or at the meeting at which it was brought up and read.
(12) Any director who contravenes the provisions of subsection (3), (6) or (9) of this section is guilty of an offence and liable on conviction to a fine of not less than N5,000,000 or imprisonment for a term of 3 years or to both such fine and imprisonment.
Section 18 BOFIA 2020
Prohibition of interlocking directorship, etc.
(1) No bank shall— (a) employ or continue the employment of any person who is, or at any time has been adjudged bankrupt or has suspended payment to or has compounded with his creditors or who is or has been convicted by a court for an offence involving fraud or dishonesty, or professional misconduct; or (b) be managed by a management agent except as may be approved by the Bank.
(2) Except with the approval of the Bank, no bank shall have as a director, any person who is a director of — (a) any other bank; or (b) any company or entity which has significant influence on the bank: Provided that in the case of a financial holding company, the aggregate number of directors from the subsidiaries and associates shall not exceed 30 per cent of the members of the board of directors of the financial holding company and the number of directors of the financial holding company in the board of a subsidiary or associate shall not exceed 30 per cent of the members of the board of such subsidiary or associate.
(3) For purposes of subsection (2)(b) of this section, “significant influence” means direct or indirect ownership of five (5) per cent or more of the voting rights in the bank or controlling influence in the decision-making process of the bank.
(4) No bank shall be managed by a person who is — (a) a director of any other company not being a subsidiary of the bank; or (b) engaged in any other business or vocation whether remunerated or not except such personal or charitable causes as may be determined by the Bank and which do not conflict with or detract from their full-time duties.
(5) Every director of a bank shall sign and adhere to a code of conduct in such form or manner as the Bank may, from time to time, prescribe.
(6) The chief executive of a bank shall cause all the officers of the bank to sign and adhere to a code of conduct as may be approved by the board of directors.
Section 19 BOFIA 2020
Restrictions on certain banking activities
(1) A bank, specialised bank or other financial institution shall not, without the prior approval in writing of the Bank, grant — (a) to any person any advance, loan or credit facility or give any financial guarantee or incur any other liability on behalf of any person so that the total value of the advance, loan, credit facility, financial guarantee or any other liability in respect of the person is at any time more than 20 per cent of the shareholders’ funds unimpaired by losses in the case of a commercial bank, and 50 per cent of the shareholders’ funds unimpaired by losses in the case of a merchant bank, and in the case of specialised banks and other financial institutions, such percentage as the Bank may from time to time determine:
Provided that Bank may from time to time prescribe such other percentages as it may from time to time determine and shall have power to prescribe single obligor limits specific to non-interest banks having regard to their peculiarities;
(b) any advances, loans or credit facilities against the security of its own shares; or (c) any unsecured advance, loan or credit facility except it is in line with the regulation on collateralisation as may be issued by the Bank.
(2) For the purpose of paragraph (a) of subsection (1) of this section all advances, loans or credit facilities extended to any person shall be aggregated and shall include all advances, loans or credit facilities extended to any subsidiaries or affiliates of a body corporate or such other related party as the Bank may by regulation, prescribe from time to time:
Provided that the provisions of paragraph (a) of subsection (1) of this section shall not apply to transactions between banks or between branches of a bank or to the purchase of clean or documentary bills of exchange, telegraphic transfers or documents of title to goods the holder of which is entitled to payment for exports from Nigeria or to advance made against such bills, transfers or documents.
(3) A bank shall not, without the prior approval in writing of the Bank − (a) permit to be outstanding, unsecured advances, loans or unsecured credit facilities, of an aggregate amount in excess of N1,000,000 or such amount as may be prescribed from time to time by the Bank- (i) to its directors, significant shareholders or any of them whether such advances, loans or credit facilities are obtained by its directors or significant shareholders jointly or severally; (ii) to any firm, partnership or private company in which it or any one or more of its directors or significant shareholders is interested as director, partner, manager or agent or any individual firm, partnership or private company of which any of its directors or significant shareholders is a guarantor; or (iii) to a public company or private company in which it or any one or more of its directors or significant shareholders jointly or severally, whether directly or indirectly, maintains shareholding of not less than five per cent or such percentage as may be specified by the Bank. (b) permit to be outstanding to its officers and employees, unsecured advances, loans or unsecured credit facilities, which in the aggregate for any one officer or employee, is in excess of one year’s emolument to such officer or employee; or such amount as may be specified from time to time by the Bank. (c) remit, either in whole or in part, the debts owed to it by any of its directors, or past directors or significant shareholders.
(4) Any loan advance, or credit facility granted to a director, shall continue to be treated and continue to be reported as insider related until it is fully liquidated irrespective of whether such director remains on the board of the bank or not.
(5) A bank shall — (a) not lend more than five (5) per cent of its paid-up capital to any of its directors or significant shareholders provided that the aggregate of the bank’s exposure to all its directors and significant shareholders shall not exceed ten (10) per cent of its paid-up share capital or such percentage as the Bank may from time to time prescribe; (b) in extending credit to any of its directors or significant shareholders, ensure that – (i) it does so on the same terms and conditions as those prevailing at the time, for comparable transactions by the bank with persons who are not directors or shareholders of the bank; (ii) the grant of the credit does not involve more than the normal risk of repayment or present other unfavourable features; (iii) it follows credit appraisal procedures that are not less stringent than those applicable to comparable transactions by the bank with persons who are not directors or shareholders of the bank: Provided that nothing in this subsection shall prohibit any extension of credit made pursuant to a benefit or compensation programme that is widely available to employees of the bank; and (iv) it does not give preference to any director or shareholder.
(6) In this section, the expressions — “director”, includes director’s wife, husband, father, mother, brother, sister, son, daughter, their spouses, a company in which the director is also a director or shareholder or holds at least 5 per cent shareholding of the company, a company whose board, or managing director is accustomed to act in accordance with the advice, directions or instructions of the director and all other related parties as may from time to time be determined by the Bank;
“significant shareholder” means a person holding not less than 5 per cent of the shares of the bank or such other percentage as may from time to time be prescribed by the Bank and this shall include the shareholding of a wife, husband, father, mother, brother, sister, son, daughter, their spouses and all other related parties as may from time to time be determined by the Bank;
“unsecured advances and loans” or “unsecured credit facilities”, mean advances, loans or credit facilities made without security, or, in respect of any advances, loans or credit facilities made with security, any part thereof which at any time exceeds the market value of the assets constituting the security or where the Bank is satisfied that there is no established market value, the value of the assets as determined on the basis of a valuation approved by the Bank.
(7) All the directors of a bank shall be liable jointly and severally to indemnify the bank against any loss arising from any advances, loans or credit facilities granted in contravention of this section.
(8) Without prejudice to provisions of section 20 of this Act, a bank shall not, without the prior approval in writing of the Bank − (a) engage, whether on its own account or on a commission basis, in wholesale or retail trade, including import or export trade, except in so far as may exceptionally be necessary in the course of the banking operations and services of that bank or in the course of the satisfaction of debts due to it: Provided that nothing in this paragraph shall be construed as precluding a bank from undertaking equipment leasing business or debt factoring;
(b) acquire or hold any part of the share capital of any financial or commercial or other undertaking, except — (i) any shareholding approved by the Bank in any company set up for the purpose of promoting the development of the money market or capital market in Nigeria or of improving the financial machinery for financing economic development or related to the normal business undertakings of non-interest banks; (ii) any shareholding approved by the Bank pursuant to subparagraph (i) of this paragraph, the aggregate value of which does not at any time exceed 10 per cent of the shareholders’ funds unimpaired by losses or such other limit as the Bank may prescribe from time to time; or (iii) all shareholding acquired by a merchant bank while managing an equity issue: Provided that the aggregate value of such acquisition does not at any time exceed the paid-up share capital of that bank or any other limit as the Bank may determine from time to time and that this paragraph shall not apply to any nominee company of a bank which deals in stock and shares for or on behalf of the bank’s customers or clients or majority interest acquired by a bank in a company while managing an equity issue;
(c) acquire, hold either wholly or in part, the share capital of any financial or commercial or other undertakings in any foreign country: provided that the aggregate shareholding of a bank in foreign subsidiaries shall not exceed ten per cent of its shareholders’ funds unimpaired by losses or such other percentage as the Bank may prescribe from time to time;
(d) purchase, sell, dispose, acquire or lease any real estate for whatever purpose.
(9) Notwithstanding the foregoing provisions of this section, a bank may secure debt on any real or other property, and in default of repayment, may acquire such property and exercise any power of sale, as may be provided for in any instrument or, by law prescribed, immediately upon such default or soon thereafter as may be deemed proper.
(10) Any director, manager or officer of a bank, specialised bank or other financial institution who fails to comply with the requirements of this section is guilty of an offence and liable on conviction to imprisonment for a term of not less than 3 years or a fine of not less than N5,000,000 or to both such imprisonment and fine.
(11) Any bank which after the commencement of this Act, enters into any transaction which is inconsistent with any provision of this section shall be liable to a penalty of not less than N20,000,000.
Section 20 BOFIA 2020
Acquisition of share in small and medium scale industries, etc.
(1) Subject to the approval of the Bank, a bank may acquire or hold part of the share capital of any agricultural, industrial, private equity or venture capital company subject to the following conditions: (a) the private equity or venture capital company is set up for the purpose of promoting the development of indigenous technology or a new venture in Nigeria; (b) the shareholding of the bank is in small or medium-scale industries and agricultural enterprises as defined by the Bank; (c) the shareholding of the bank in any medium scale industry, agricultural enterprise or venture capital company or any other business approved by the Bank shall not be more than 10 per cent of the bank’s shareholders’ funds unimpaired by losses and shall not exceed 20 percent of the paid-up share capital of the company or such other percentage as the Bank may prescribe from time to time; (d) without prejudice to the provisions of section 19 (8) (b) (ii), and paragraph (c) of this subsection, the aggregate value of the equity participation of the bank in all enterprises shall not at any time exceed 20 per cent of its shareholders’ funds unimpaired by losses or such other percentage as the Bank may prescribe from time to time; and (e) in the case of a non-interest bank, the activities of the agricultural, industrial, private equity or venture capital company shall be such as are permissible under non-interest banking principles.
(2) Subject to the prior written approval of the Bank, a bank may hold shares acquired in the course of the satisfaction of any debt owed to it, provided the shares acquired are not those of the bank’s subsidiary, holding company, associate or such other related party as the Bank may by regulation prescribe from time to time.
(3) Without prejudice to the provisions of subsection (1) of this section, a bank may hold or acquire the share capital of any other business, subject to the approval of the Bank.
(4) Every bank shall, within 21 days of the acquisition of any shareholding pursuant to subsection (1) and (3) of this section, give full particulars thereof to the Bank.
(5) Any bank which fails to comply with the provisions of this section shall be liable to a penalty of not less than N5,000,000 and an additional penalty of N100,000 for each day during which the infraction continues.
Section 21 BOFIA 2020
Restriction on operations of merchant banks
(1) A merchant bank shall not– (a) accept any deposit withdrawable by cheque; (b) accept any deposit below an amount which shall be prescribed, from time to time, by the Bank; or (c) hold for more than six months any equity interest acquired in a company while managing an equity issue, except as stipulated in section Error! Reference source not found of this Act.
(2) Any merchant bank which acts in contravention of or fails to comply with any of the provisions of this section shall be liable to a penalty of not less N20,000,000 and an additional penalty of N500,000 for each day during which the infraction continues.
Section 22 BOFIA 2020
Display of information
(1) Every bank shall display at its offices and on its website: (a) its lending and deposit interest rates and shall render to the Bank information on such rates as may be specified, from time to time, by the Bank: Provided that the provisions of this subsection shall not apply to non-interest or profit and loss sharing banks; (b) its obligation to report transactions above the limits stipulated in the Anti-Money Laundering/Combating Financing of Terrorism guidelines/regulations and suspicious transactions to the Nigeria Financial Intelligence Unit; (c) foreign exchange rates; (d) certified true copy of its certificate of incorporation; (e) abridged version of its last approved audited accounts; and (f) such other information as the Bank may require from time to time.
(2) Any bank in breach of any of the provisions of this section is liable to a penalty of not less than N5,000,000 and an additional N100,000 for every day during which the infraction continues.
Section 1 to 14 of the Bank and Other Financial Institutions Act 2020 is under Part I (LICENSING AND OPERATION OF BANKS) of the Act.
Section 1 BOFIA 2020
Functions, Powers and Duties of the Central Bank of Nigeria
(1) The Central Bank of Nigeria (hereinafter referred to as “the Bank”) shall have all the functions and powers conferred and the duties imposed on it by this Act.
(2) The Bank may authorise or instruct any officer or employee of the Bank to perform any of its functions, exercise any of its powers, or discharge any of its duties under this Act.
(3) The Bank may, either generally or in any particular case, appoint any person who is not an officer or employee of the Bank, to render such assistance as it may specify in the exercise of its powers, the performance of its functions, or the discharge of its duties under this Act, or the Central Bank of Nigeria Act, or to exercise, perform or discharge the functions and duties on behalf of and in the name of the Bank.
Section 2 BOFIA 2020
Banking Business
(1) No person shall carry on any banking business in Nigeria except it is a company duly incorporated in Nigeria and holds a valid banking licence issued under this Act.
(2) Any person who carries on banking business in Nigeria without a valid licence under this Act is guilty of an offence and liable on conviction to imprisonment for a term of not less than 5 years or a penalty of the higher of N50, 000,000 or two times the cumulative deposits or other amount collected or to both such imprisonment and fine.
(3) Any person for the purpose of subsection (2) of this section, includes: a body corporate, its promoters, its directors, its managers, or officers that are in any way connected with superintending, directing or managing the affairs of the company.
(4) For the purpose of refunding the deposits to account holders in subsection (2) of this section, the bank may direct that the moneys be deposited with a licenced bank appointed for that purpose who will undertake the refund and report thereon to the Bank.
(5) For the purposes of this Act, a person shall be deemed to be receiving money as deposits and thus, conducting banking business – (a) if the person accepts deposits from the general public as a feature of its business or if the person solicits for deposits orally, electronically or through any form of advertisement or otherwise by any other means; or (b) if the person receives moneys as deposits which are limited to fixed amounts, or for which certificates or other instruments are issued in respect of any such amounts providing for the repayment to the holder thereof either conditionally or unconditionally of the amount of the deposits at specified or unspecified dates, or for the payment of interest, dividend, profit or fees on the amounts deposited at specified intervals or otherwise, or that such certificates are transferable:
Provided that the receiving of moneys against any issue of shares, debentures or non-interest bearing instruments offered to the public in accordance with any enactment in force within the Federation shall not be deemed to constitute receiving moneys as deposits for the purpose of this Act.
Section 3 BOFIA 2020
Application for grant of Licence
(1) Any person desiring to undertake banking business in Nigeria shall apply in writing to the Governor for the grant of a licence and shall accompany the application with the following: (a) a feasibility report for the proposed bank including financial projections for at least 5 years; (b) a draft copy of the memorandum and articles of association of the proposed bank; (c) a list of the shareholders, directors and principal officers of the proposed bank and their particulars; (d) where the application is in relation to non-interest banking, a list of experts on non-interest banking or finance that will serve as its advisory committee of experts; (e) the prescribed application fee; and (f) such other information, documents and reports as the Bank may, from time to time; specify.
(2) After the applicant company has provided all such information, documents and reports as the Bank may require under subsection (1) of this section, the shareholders of the proposed bank shall deposit with the Bank, a sum equal to the minimum paid-up share capital that may be applicable under section 9 of this Act.
(3) Upon the payment of the sum referred to in subsection (2) of this section, the Governor may with the approval of the Board, issue a licence with or without conditions or refuse to issue a licence and the Governor need not give any reason for such refusal.
(4) Where a licence is granted, the Bank shall duly notify the applicant and upon being notified, the applicant shall pay the prescribed licence fee within the time stipulated by the Bank.
(5) Any foreign bank or other entity which does not have a physical presence in its country of incorporation, or which is not licensed in its country of incorporation and which is not affiliated to any financial services group that is subject to effective consolidated supervision, shall not be permitted to operate in Nigeria, and no Nigerian bank shall establish or continue any relationship with such bank or other entity.
(6) Any bank that breaches the provisions of subsection (5) of this section is liable to a penalty of not less than N20,000,000 and to an additional penalty of N500,000 for each day the infraction continues.
Section 4 BOFIA 2020
Investment and release of prescribed Minimum Share Capital
(1) The Bank may invest any sum deposited with it pursuant to section 3 (2) of this Act in treasury bills or such other securities or where the sum is deposited in pursuance of an application for a non-interest bank, in non-interest bearing securities or similar non-interest banking compliant product or investment, until such a time as the Governor shall decide whether or not to grant a licence.
(2) Where the sum deposited in pursuance of section 3 (2) of this Act is invested in pursuance of subsection (1) of this section, and: (a) a licence is not granted, the Bank shall repay the sum deposited to the applicant, together with the investment income after deducting administrative expenses and tax on the income; (b) a licence is granted, the Bank shall repay the sum deposited to the licenced institution together with the investment income and the investment income shall be treated as income of the licenced institution.
Section 5 BOFIA 2020
Power to Revoke or vary conditions of Licence
(1) The Bank may vary or revoke any condition subject to which a license was granted or may impose fresh or additional conditions to the grant of a license.
(2) Where the grant of a license is subject to conditions, the bank shall comply with those conditions to the satisfaction of the Bank within such period as the Bank may deem appropriate in the circumstances.
(3) Any bank which fails to comply with any of the conditions of its licence shall be liable to a penalty of not less than N20,000,000, and to an additional penalty of N500,000 for each day during which the condition is not complied with.
(4) Where the Governor proposes to vary, revoke or impose fresh or additional conditions on a licence, the Governor shall, before exercising such power, give notice of this intention to the bank concerned and give the bank an opportunity to make representation to him thereon.
(5) Any bank which fails to comply with any fresh or additional condition imposed in relation to its licence, shall be liable to a penalty of not less than N5,000,000 and to an additional fine of N100,000 for each day during which the fresh or additional condition is not complied with.
(6) Any person who, being a director, manager or officer of a bank fails to take reasonable steps to secure compliance with any of the conditions of the licence of the bank is guilty of an offence and liable on conviction to imprisonment for a term not less than 3 years or a fine of not less than N2,000,000 or for both such imprisonment and fine.
Section 6 BOFIA 2020
Opening and closing of branches
(1) No bank may open or close any branch office, cash centre or representative office anywhere within or outside Nigeria except with the prior written consent of the Bank.
(2) Any bank intending to close any of its branches or subsidiaries outside Nigeria shall give notice in writing to the Governor, of its intention, at least six months before the date of the intended closure, or within such shorter period as the Governor may, in any particular case, allow.
(3) The Bank may direct any bank to divest from any of its subsidiaries where the Bank determines that any such continued investment of a bank imperils the financial health of the bank, or where the Bank determines that the oversight by the bank, or supervision by the host regulator over such subsidiary is not adequate relative to the risks the subsidiary presents, or if the Bank cannot gain access to the information required to assess the risk posed to a bank by such subsidiary on a continuous basis.
(4) Any bank which contravenes the provisions of subsections (1) or (2) of this section or which fails to comply with a directive of the Bank made pursuant to subsection (3) of this section shall be liable to a penalty of not less than N5,000,000 and an additional penalty of N100,000 for each day during which the contravention continues.
(5) Without prejudice to the provisions of subsection (4) of this section, the Governor may order – (a) the closure of any branch office, cash centre or representative office or any other banking outlet opened without the prior written consent of the Governor in contravention of subsections (1) or (2) of this section; or (b) the re-opening of any branch office, cash centre or representative office or any other banking outlet closed without the prior written consent of the Governor in contravention of subsection (1) of this section.
Section 7 BOFIA 2020
Restructuring, reorganization, merger and disposal, etc. of Banks
(1) Except with the prior written consent of the Governor, no bank shall enter into an agreement or arrangement- (a) which results in: (i) a change in the control of the bank; or (ii) the transfer of a significant shareholding in the bank;
(b) for the sale, disposal or transfer howsoever, of the whole or any part of the business of the bank; (c) for the amalgamation or merger of the bank with any other person; (d) for the restructuring, reconstruction or reorganisation of the bank; or (e) to transfer the whole or any part of the business of the bank to any such agent.
(2) Where any bank proposes to enter into any agreement or arrangement under subsection (1) of this section, the Bank may on the application of any of the banks to be affected, order separate meetings of the banks to be summoned in such manner as the Bank may direct.
(3) Any transaction in contravention of the provisions of subsection (1) of this section shall be void and any transfer of interest thereunder shall be ineffectual except where such transaction is subsequently ratified in writing by the Bank.
(4) The Bank may approve an agreement or an arrangement covered by subsection (1) of this section if and only if the Bank is satisfied that — (a) such agreement or arrangement is not likely to cause a restraint of competition, or tend to create a monopoly in the banking industry; (b) the significant shareholders or directors of the bank that results from the agreement or arrangement are not disqualified under section 47 of this Act; (c) the agreement or arrangement is consistent with public interest; and (d) the bank that results from the agreement or arrangement meets the capital requirements prescribed pursuant to sections 9 and 13 of this Act.
(5) Upon the grant of a new banking licence by the Bank to a bank which results from the agreement or arrangement in subsection (1) of this section, all the assets and liabilities of the banks that are parties to the agreement or arrangement shall, by virtue of the grant of the new banking licence, be transferred to and become the assets and liabilities of the new bank.
(6) The provisions of this Act shall apply notwithstanding the provisions of the Federal Competition and Consumer Protection Act.
(7) Any person who breaches the provisions of subsection (1) of this section is liable to a penalty of not less than N20,000,000 and in the case of a continuing breach, to an additional penalty of N500,000 for each day during which the breach continues.
Section 8 BOFIA 2020
Operations of Foreign Banks in Nigeria and Offshore Banking
(1) Except with the prior approval of the Bank, no foreign bank shall operate branch offices or representatives offices in Nigeria
(2) Without prejudice to the provisions of Nigeria Processing Zones Authority Act or any other related enactment or law, the Bank may subject to such-conditions as it may impose, from time to time, grant to any bank registered in Nigeria or a foreign bank a licence to undertake domestic or off-shore banking business within a designated free trade or special economic zone in Nigeria.
(3) No bank or other person shall undertake offshore banking business from Nigeria except with the prior approval of the Bank.
(4) For the purpose of subsections (2) and (3) of this section, the term offshore banking means the provision from within Nigeria of cross-border intermediation of funds and or the provision of banking and financial services to non-residents of Nigeria, other than non-residents that are Nigerian citizens.
(5) Subject to the provisions of subsection (1) of this section, nothing in the provisions of the Nigerian Investment Promotion Commission Act or any other law or enactment, shall be construed as authorising any person whether as a citizen of Nigeria or a non-Nigerian to carry on any banking business in Nigeria without a valid banking licence issued by the Bank under this Act.
(6) Any person who contravenes the provisions of subsections (1) or (3) of this section is guilty of an offence and shall be liable on conviction to a fine of not less than N10,000,000, and every director of any such foreign bank or bank shall be liable to imprisonment for a term of not less than 3 years or a fine of not less than N2,000,000 or to both such imprisonment and fine.
Section 9 BOFIA 2020
Minimum paid-up share capital of banks and compliance with the minimum paid-up share capital requirement
(1) The Bank shall, from time to time, determine the minimum paid-up share capital requirement of each category of banks licenced under this Act which shall be complied with by each bank within the time prescribed by the Bank.
(2) Any failure to comply with the provisions of subsection (1) of this section within such period as may be determined by the Bank, from time to time, shall be a ground for the revocation of any licence issued pursuant to the provisions of this Act or any other Act repealed by it.
Section 10 BOFIA 2020
Shareholder’s Voting Rights to be Proportional to Shareholding
Notwithstanding the provisions of the Companies and Allied Matters Act or any agreement or contract, the voting rights of every shareholder in a bank shall be proportional to individual contributions to the paid-up share capital of the bank.
Section 11 BOFIA 2020
Restriction of legal proceedings in respect of shares held in the name of another
Notwithstanding anything contained in any law or in any contract or instrument, no suit or other proceedings shall be maintained against any person registered as the holder of a share in a bank on the ground that the title to the said share is vested in any person other than the registered holder:
Provided that nothing in this section shall bar a suit or other proceedings on behalf of a minor or person suffering from any mental illness on the ground that the registered holder holds the share on behalf of the minor or person suffering from the mental illness.
Section 12 BOFIA 2020
Revocation of Banking licence
(1) Notwithstanding the provisions of this Act or any other law, the Governor may with the approval of the Board and by notice published in the Gazette, or print and electronic media, revoke any licence granted under this Act if a bank: (a) ceases to carry on in Nigeria, the type of banking business for which the licence was issued for any continuous period of six months or any period aggregating six months during a continuous period of twelve months; (b) goes into liquidation or is wound up or otherwise dissolved; (c) fails to fulfil or comply with any condition subject to which the licence was granted; (d) has insufficient assets to meet its liabilities; (e) conducts its business in an unsound manner or its directors engage in unsafe practices; (f) is involved in a situation, circumstance, action or inaction which constitutes a threat to financial stability; or (g) fails to comply with any obligation imposed upon it by or under this Act or the Central Bank of Nigeria Act or any other rules, regulations, guidelines or directives made hereunder; (h) is in the opinion of the Bank critically undercapitalized with a capital adequacy ratio below the prudential minimum or such other ratio as the Bank may prescribe from time to time; (i) fails to commence banking operations within a period of twelve months following the grant of a licence; or (j) fails to comply with the provisions of sections 9 or 13 of this Act.
(2) Where the licence of a bank has been revoked pursuant to this Act, and the Governor is satisfied that it is in the public interest to do so, the Governor may, subject to the approval of the Board and without waiting for any period prescribed for doing anything under this Act or any law to lapse, appoint the Nigeria Deposit Insurance Corporation (hereinafter referred to as “the Corporation”) as a liquidator of the affected bank and the Corporation shall have the powers conferred on a liquidator by or under the Companies and Allied Matters Act and shall be deemed to have been appointed a liquidator by the Federal High Court for the purpose of this Act.
(3) Notwithstanding the provisions of this Act, the Companies and Allied Matters Act or any other law, where the Bank has revoked any licence granted under this Act, and the Bank has appointed the Corporation as a liquidator pursuant to subsection (2) of this section, the Corporation shall immediately proceed with the liquidation of the bank whose licence has been revoked and the payment of assured deposit liabilities pursuant to the Nigeria Deposit Insurance Corporation Act.
(4) An action to challenge the revocation of the licence of a bank, specialised bank or other financial institution on any ground whatsoever shall only be instituted in the Federal High Court and such action and any appeal arising therefrom shall be heard and determined on an expedited and accelerated basis.
(5) No action in respect of the revocation of the licence of a bank, specialised bank or other financial institution shall be filed or maintained unless such action is filed within a period of thirty days from the date of the revocation.
(6) Notwithstanding the provisions of this Act or any other enactment, no restorative or like order howsoever described, shall be granted against the Bank or the Governor in any action, suit or proceedings in relation to the revocation of a licence by the Bank under this Act, and the remedy of any claimant or applicant against the Bank or the Governor in any such action, suit or proceedings is limited to monetary compensation not exceeding the equivalent of the value of the paid-up capital of the bank at the time of the revocation of its licence.
Section 13 BOFIA 2020
Minimum capital ratio
(1) A bank shall maintain, at all times, capital funds unimpaired by losses, in such ratio to all or any assets or to all or any liabilities or to both such assets and liabilities of the bank and all its offices in and outside Nigeria as may be specified by the Bank.
(2) Notwithstanding subsection (1) of this section, the Bank may prescribe a higher or lower capital adequacy ratio with respect to any category of banks.
(3) The Bank may require a bank to maintain additional capital as the Bank considers appropriate in respect of specific risks.
(4) The Bank may require a bank that has — (a) a holding company; (b) a subsidiary; or (c) a holding company and a subsidiary: (d) to calculate and maintain minimum capital adequacy ratio on a consolidated basis.
(5) Any bank which fails to observe any such specified ratios may be prohibited by the Bank from — (a) advertising for or accepting new deposits; (b) granting credit or finance and making investments; (c) paying cash dividends to shareholders; (d) paying bonus to its directors, other than the approved emoluments and/or benefits; or (e) engaging in any other activities as the Bank may specify from time to time.
(6) Notwithstanding the provisions of subsection (5) of this section, the Bank shall have power to impose such additional holding actions, prohibitions and conditions as it may deem fit for failure to comply with the specified capital adequacy ratio.
(7) In addition, the bank may be required to draw up within a specified time, a capital reconstitution plan acceptable to the Bank.
Section 14 BOFIA 2020
Minimum holding of cash reserves, specified liquid assets, special deposits and stabilisation securities
(1) Every bank shall maintain with the Bank, cash reserves, and special deposits or any non-interest banking instruments as may from time to time be approved by the Bank and hold specified liquid assets or other securities, as the case may be, not less in amount than as may, from time to time, be prescribed by the Bank by virtue of section 45 of the Central Bank of Nigeria Act.
(2) Where both assets and liabilities are due from and to other banks, they shall be offset accordingly, and any surplus of assets or liabilities shall be included or deducted, as the case may be, in computing specified liquid assets.
(3) In the case of the long-term advances to a bank or by an overseas branch or office of a bank, the advances may, with the approval of the Bank, be excluded from the demand liabilities of the bank.
(4) Every bank shall — (a) furnish within the specified time, any information required by the Bank to satisfy the Bank that the bank is observing the requirements of subsection (1) of this section; (b) not allow its holding of cash reserves, specified liquid assets, special deposits and securities to be less than the amount which may, from time to time, be prescribed by the Bank; and (c) not during the period of any deficiency, grant or permit increases in advances, loans or credit facilities to any person without the prior approval in writing of the Bank.
(5) Any bank which fails to comply with any of the provisions of subsection (4) of this section, is liable to a penalty of not less than N5,000,000 and an additional penalty of N100,000 for each day during which the contravention continues.
(6) For the purpose of this section, specified liquid assets provided they are freely transferable and free from any lien or charge of any kind shall, without prejudice to the provisions of section 45 of the Central Bank of Nigeria Act, consist of all or any of the following — (a) currency notes and coins which are legal tender in Nigeria; (b) balances at the Bank; (c) net balances at any licenced bank (excluding uncleared effects) and money at call in Nigeria; (d) treasury bills, treasury certificates and any non-interest banking instruments as may from time to time be approved by the Bank issued by the Federal Government; (e) inter-bank placement, inland bills of exchange and promissory notes re-discountable at the Bank; (f) other securities issued by the Federal Government with such dates of maturity as may be approved by the Bank; (g) negotiable certificates of deposit approved by the Bank; and (h) such other negotiable instruments as may, from time to time, be approved by the Bank for the purpose of this section.
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