Regulatory Alerts2010-11-09 | BSD/DIR/RBG/2010/08Regulation on the Scope of Banking Activities & Ancillary Matters, No. 3, 2010
This regulation is aimed at defining the scope of banking activities that commercial banks can engage in under the Banks and Other Financial Institutions Act (BOFIA). The regulation emphasizes a move away from universal banking, where banks could offer a wide range of financial services, to specialized or limited banking. It outlines various measures for banks to implement within specified deadlines. These include divesting interests in non-banking related enterprises and obtaining appropriate licenses specific to their new business scope. The regulation establishes standards such as defining what constitutes a "related enterprise", clarifying terms like 'Related Enterprise', 'Significant Influence', 'Custodian', etc. It also stipulates a clear path towards financial services' specialization, by specifying measures like submission of a detailed 'Compliance Plan', reporting procedures, etc. More specifically, the regulation outlines several key points: 1) It sets out the process for banks to divest their interests in non-banking related enterprises within specified deadlines. 2) It lays down the rules and standards required for a bank to obtain an appropriate license specific to its new business scope. 3) Lastly, it emphasizes the importance of transparency and accountability in commercial banking activities. In conclusion, this regulation is pivotal as it marks a significant change direction in Nigerian commercial banking activities. It introduces a shift towards financial services' specialization, and thereby, enhances the overall efficiency, stability, and transparency within the nation's commercial banking system.