Worried by the new trend of insider dealings threatening the gains of the banking sector reforms, the Central Bank of Nigeria (CBN) has directed that henceforth all facilities to board members and staff above N1 million be disclosed in the Credit Risk Management System (CRMS).
The CBN, in a circular by Tokunbo Martins, director of banking supervision, CBN, last night, threatened to sanction any bank that refuses to comply as it has evidence of insider dealings in some banks.
Coming barely 24 hours after Sanusi Lamido Sanusi, CBN governor, raised alarm over the persisting unwholesome practices despite the reforms, analysts said on Wednesday that Sanusi may soon move beyond the threat to sanction the culprits.
Consequently, CBN said last night that the CRMS is a central data base which makes it mandatory for all banks to render their returns in the spirit of the new prudential guidelines.
But some analysts said last night that the growing ugly trend is a reflection of lack of expertise at the regulatory bank, particularly in risk management and credit evaluation for which the banks are taking undue advantage.
However, part of the circular said, “The Central Bank of Nigeria (CBN) has observed with dismay that banks do not report the credit facilities availed to their board members and staff in the Credit Risk Management System (CRMS). For the avoidance of doubt, the CRMS, which is a central database for credit information on borrowers, established by the CBN Act No.24 of 1991 [Sections 28 and 52] as amended made it mandatory for all banks to render returns to the CRMS in respect of all credit facilities of N1 million and above”.
“Thus, the credit facilities availed to board members and staff of banks are not exempted. Banks are therefore required to report all credit facilities (principal plus interest) of N1 million and above availed to their board members and staff in the CRMS as well as regularly update these credit facilities on monthly basis. This circular serves as a reminder and warning to all banks as any observed breach will attract severe sanctions”.
However, some analysts, while commending CBN for the gains of the sector reforms warned that unless urgent steps are taken, some smart operators will rubbish the whole process.
“Although we commend the CBN for all the efforts so far, Sanusi should be mindful of the antics of some smart operators who are cashing in on the apparent lack of enough competent staff at CBN”, says an analyst.
By: JOHN OMACHONU & HOPE MOSES-ASHIKE