Regulatory Alerts2009-04-08 | BSD/DIR/GEN/CIR/03/003Sanctions for the Violation of the Decision on Maximum Deposit Rate, Lending Rate and Other Charges.
The Central Bank of Nigeria (CBN) has issued a circular to all banks, announcing sanctions for violating the maximum deposit and lending rates set by the Bankers' Committee. Banks found guilty of offering deposit rates higher than 15% or similar violations will face fines ranging from N50 million for first-time offenders to potential suspension of their managing directors if they breach the rules a third time. These sanctions, which include banning access to RDAS and Class 'A' Bureau de Change windows, come into immediate effect.
234-9-462 35433, 462 36403 234-9-46236418,
BSD/DO/GEN/BCD/2009 April 8, 2009
Circular To All Banks
SANCTIONS FOR VIOLATION OF THE DECISION ON MAXIMUM DEPOSIT RATE, LENDING RATE AND OTHER CHARGES
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It will be recalled that the Bankers' Committee at its meeting of March 21, 2009 unanimously decided to reduce maximum deposit rate to 15 per cent per annum, lending rate to 22 per cent per annum, and other charges to 2 per cent per annum with effect from April 1, 2009 till December 31, 2009 in the interest of the banking industry.
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However, in less than two weeks after the said Bankers' Committee decision was made public, some banks have resumed the fierce competition for deposits by offering deposit rates in excess of the agreed maximum of 15 per cent per annum in order to entice depositors to move their deposits from one bank to the other.
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The CBN considers the actions of the erring banks as infringement on its regulatory powers and a deliberate attempt to undermine the effectiveness of its efforts at promoting a sound and healthy banking system in Nigeria.
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To effectively deter and penalize actual violations of the Bankers' Committee's decision on maximum deposit rate, lending rate and other charges, the following sanctions shall, without prejudice to the provisions of Section 60 and 60A of BOFIA, 1991 as amended, be applied against erring banks.
| i. | First Time | Monetary penalty of N50 million and a letter of warning to the MD/CEO of the erring bank. | ||||
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| ii. | Second Time | Suspension of the bank from accessing the RDAS and Class 'A' Bureau de Change window in addition to the fine of N50 million. | ||||
| iii. | Third Time | Suspension | of | the MD/CEO, | and | all |
| officials of the bank involved in the breach. |
The implementation of these sanctions takes immediate effect. D. A. N. EKE Ag. DIRECTOR OF BANKING SUPERVISION 2