Major stakeholders in banking and finance, on Monday, disagreed
with the Senate over its proposed amendment of laws on the
regulation and supervision of Micro Finance Banks (MFBs) in the
country.
They said that what the bank needed was remodelling of its
operations to function effectively and not the amendment of laws
regulating its operations.
The stakeholders included the Federal Ministry of Finance,
Central Bank of Nigeria (CBN), the Nigeria Deposit Insurance
Corporation (NDIC), and Institute of Chartered Accountants of
Nigeria (ICAN).
They made the position known at a Public Hearing organised by
Senate Committee on Banking, Insurance and other Financial
Institutions in Abuja.
The hearing was on three Bills one of which is “Bill for an Act
to make provisions for the licensing, regulation and supervision of
microfinance business in Nigeria and for related purposes,
2017.’’
It includes “Bill was a bill for an Act to amend motor vehicle
third party insurance Act, 2004 to facilitate the accomplishment of
the objectives of compulsory third party insurance and for related
matters, 2017.’’
In his submission, CBN Governor, Mr Godwin Emefiele, argued that
the Bills were unnecessary.
He said that if licensing, regulatory and supervisory roles
which were traditional obligations of CBN was now given to the
ministry or NDIC through planned amendment, it may cause serious
conflict in the nation’s financial system operations.
Represented by the Director of Legal Services, Mr Johnson
Akinkunmi, Emefiele said that the power to license banks to lay
with the CBN.
He added that no other government agency or ministry was
empowered under the law to assume the power to supervise banks,
determine their licences and appoint self as liquidator.
“The Bills attempted to demarcate Micro Finance Banks into two –
those that take deposit and those that do not and hope to be
regulated by the Ministry of Finance.
“This will cause conflict because the CBN has power of
regulating banks.
“Another major problem that the Bill will cause is that some
categories of Micro Finance Banks will be regulated by the Ministry
of Finance and some by the CBN.
“This is unhealthy and very unnecessary. There is no reason to
carve out deposit insurance for micro-finance outside the NDIC,” he
said.
Emefiele charged the Senate to look at the challenges to assist
in addressing them rather than amendment of the Act.
According to him, the policy and strategic direction is the
legal framework that will make Micro-Finance Banks function
effectively.
Similarly, Minister of Finance, Mrs Kemi Adeosun, agreed with
the CBN Governor and said that the ministry was not asking for
powers to supervise banks.
Adeosun was represented by the Permanent Secretary in the
ministry, Alhaji Mahmud Dutse.
In his submission, President, Institute of Chartered Accountants
of Nigeria (ICAN), Mr Ismaila Zakari, appreciated the efforts of
the National Assembly toward strengthening Nigeria’s financial
system.
“We also appreciate the National assembly for empowering
Nigerians for economic freedom and boosting the gross domestic
product of Nigeria, among other numerous laudable initiatives,” he
said.
He said that the body had identified a number of gaps in the
proposed Act and made recommendations.
“For instance, ICAN suggested amendment to Section 30 (a) of the
proposed Act, which states that `no one shall be appointed as
external auditor of an institution if such person is not qualified
under the Companies and Allied Matters Act’”.
Making reference to Section 41 of the Financial Reporting
Council of Nigeria Act 2011, ICAN stated that in that section,
external auditors must also be appointed in line with the Act.
“Our observation is that a professional is functioning as an
auditor to a micro finance institution does not imply that he or
she uses fiduciary information obtained in the course of his/her
audit for any other purposes,” he said.
Major stakeholders in banking and finance, on Monday, disagreed
with the Senate over its proposed amendment of laws on the
regulation and supervision of Micro Finance Banks (MFBs) in the
country.
They said that what the bank needed was remodelling of its
operations to function effectively and not the amendment of laws
regulating its operations.
The stakeholders included the Federal Ministry of Finance,
Central Bank of Nigeria (CBN), the Nigeria Deposit Insurance
Corporation (NDIC), and Institute of Chartered Accountants of
Nigeria (ICAN).
They made the position known at a Public Hearing organised by
Senate Committee on Banking, Insurance and other Financial
Institutions in Abuja.
The hearing was on three Bills one of which is “Bill for an Act
to make provisions for the licensing, regulation and supervision of
microfinance business in Nigeria and for related purposes,
2017.’’
It includes “Bill was a bill for an Act to amend motor vehicle
third party insurance Act, 2004 to facilitate the accomplishment of
the objectives of compulsory third party insurance and for related
matters, 2017.’’
In his submission, CBN Governor, Mr Godwin Emefiele, argued that
the Bills were unnecessary.
He said that if licensing, regulatory and supervisory roles
which were traditional obligations of CBN was now given to the
ministry or NDIC through planned amendment, it may cause serious
conflict in the nation’s financial system operations.
Represented by the Director of Legal Services, Mr Johnson
Akinkunmi, Emefiele said that the power to license banks to lay
with the CBN.
He added that no other government agency or ministry was
empowered under the law to assume the power to supervise banks,
determine their licences and appoint self as liquidator.
“The Bills attempted to demarcate Micro Finance Banks into two –
those that take deposit and those that do not and hope to be
regulated by the Ministry of Finance.
“This will cause conflict because the CBN has power of
regulating banks.
“Another major problem that the Bill will cause is that some
categories of Micro Finance Banks will be regulated by the Ministry
of Finance and some by the CBN.
“This is unhealthy and very unnecessary. There is no reason to
carve out deposit insurance for micro-finance outside the NDIC,” he
said.
Emefiele charged the Senate to look at the challenges to assist
in addressing them rather than amendment of the Act.
According to him, the policy and strategic direction is the
legal framework that will make Micro-Finance Banks function
effectively.
Similarly, Minister of Finance, Mrs Kemi Adeosun, agreed with
the CBN Governor and said that the ministry was not asking for
powers to supervise banks.
Adeosun was represented by the Permanent Secretary in the
ministry, Alhaji Mahmud Dutse.
In his submission, President, Institute of Chartered Accountants
of Nigeria (ICAN), Mr Ismaila Zakari, appreciated the efforts of
the National Assembly toward strengthening Nigeria’s financial
system.
“We also appreciate the National assembly for empowering
Nigerians for economic freedom and boosting the gross domestic
product of Nigeria, among other numerous laudable initiatives,” he
said.
He said that the body had identified a number of gaps in the
proposed Act and made recommendations.
“For instance, ICAN suggested amendment to Section 30 (a) of the
proposed Act, which states that `no one shall be appointed as
external auditor of an institution if such person is not qualified
under the Companies and Allied Matters Act’”.
Making reference to Section 41 of the Financial Reporting
Council of Nigeria Act 2011, ICAN stated that in that section,
external auditors must also be appointed in line with the Act.
“Our observation is that a professional is functioning as an
auditor to a micro finance institution does not imply that he or
she uses fiduciary information obtained in the course of his/her
audit for any other purposes,” he said.
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