The House of Representatives on Wednesday mandated its Committees on Banking Regulations and Banking Institutions to conduct an investigative hearing on the non-compliance by banks and financial institutions with CBN directives on the Net Open Position Limits.
This 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 Hon. Babajimi Benson (Lagos,APC) at plenary.
Benson noted that the Central Bank of Nigeria (CBN) is saddled with the responsibility of regulating the monetary policies of the country as provided for by the CBN Act.
Adding that in the performance of this duty, the CBN 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 requires 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”
“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”
The lawmaker further said that this speculative activity by commercial banks and certain financial institutions has further exacerbated the harsh economic situation in the country and led to difficulty 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 dollar among which are the Net Open Position Limits and holding excess long foreign exchange”
He recalled that commercial banks and certain financial institutions are reluctant to implement the monetary measures put in place by the apex bank to check this unwholesome practices by banks and other financial institutions in the country.
Consequently he explained that unless drastic legislative measures are taken to enforce the implementation of these directives, the country will continue to experience dire economic hardship as a result of continuous rise in foreign exchange rates.
The House However mandated its Committee on Legislative Compliance to ensure full implementation.
