Reps query financial institutions over hoarding of forex 

Elizabeth AtimeFebruary 7, 20243 min

Lawmakers in the House of Reps have mandated the Committees on Banking Regulations and Banking Institutions to query financial institutions over the hoarding of forex.

CBN ways and means

The House of Representatives, on Wednesday, mandated the House Committees on Banking Regulations and Banking Institutions to conduct a probe into the suspected non-compliance by banks and financial institutions to the directives of the Central Bank of Nigeria (CBN) on the Net Open Position Limits (NOPL).

This decision was sequel to the adoption of a motion of matters of urgent national importance on the “Need for Banks to Implement CBN’s Policies on Holding Excess Long Foreign Exchange and Net Open Position limits Moved by Rep. Babajimi Benson (Lagos, APC).

Benson noted that the CBN is saddled with the responsibility of regulating the monetary policies of the country as provided for by the CBN Act and is empowered to make regulations and give directives for commercial banks and certain financial institutions to implement.

He further noted that Section 8 (4) and (5) of the CBN Act require that the CBN Governor is expected to brief the relevant Committees of the National Assembly during the semi-annual hearings as well as provide periodic reports on the performance of the economy to the National Assembly. 

“There has been a steady rise in the rate of the dollar in comparison to the naira. It rose to N1,520 to the dollar in the last week. This astronomical rise has been caused by diverse market forces and certain economic policies adopted by the government, including the liberalisation of the dollar,” he began.

“The commercial banks and certain financial institutions in Nigeria usually hold back a large part of forex they obtain either through purchase, borrowing or allocation from the CBN rather than lending to their customers with a view to selling it when the exchange rate is high.”

Moving forward, the lawmaker explained that the speculative activity by commercial banks and certain financial institutions has further exacerbated the harsh economic situation in the country leading to difficulties experienced by legitimate businesses to obtain forex for their business transactions.

“The CBN has intervened by introducing new monetary policies to check the rise in the rate of the dollar among which are the Net Open Position Limits and holding excess long foreign exchange,” he continued.

“The commercial banks and certain financial institutions are reluctant to implement the monetary measures put in place by the apex bank to check these unwholesome practices by banks and other financial institutions in the country.”

Passing the motion, the lawmakers called for drastic legislative measures to be taken to enforce the implementation of the directives and mandated its Committee on Legislative Compliance to ensure full implementation. 

Elizabeth Atime

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