Nigeria: House of Representatives to Probe Banks’ Non-Adherence to 24-Hour FX Sell Down Directive

House of Representatives to Probe Banks’ Non-Adherence to 24-Hour FX Sell Down Directive
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The House of Representatives has announced plans to investigate banks and financial institutions for non-compliance with directives from the Central Bank of Nigeria (CBN) regarding Net Open Position (NOP) limits.

In a recent notice, the apex bank instructed commercial banks to reduce their foreign currency holdings within 24 hours, warning of sanctions for non-compliance. In response, the House has tasked its committees on Banking Regulations and Banking Institutions to conduct an investigation and submit a report.

The decision follows the adoption of a motion by Rep. Babajimi Benson (APC-Lagos) during the plenary session in Abuja on Wednesday. Benson highlighted a consistent increase in the value of the US dollar relative to the naira, attributing it to various market forces and economic policies, including the liberalization of the dollar.

He explained that commercial banks and certain financial institutions in Nigeria tend to withhold significant portions of acquired foreign exchange, speculating on selling them at higher rates instead of lending to customers. This practice, he argued, exacerbates economic challenges and hampers legitimate businesses’ access to forex for transactions.

Benson emphasized the need for legislative measures to enforce CBN directives, warning of prolonged economic hardship if left unchecked. The House mandated the Committee on Legislative Compliance to ensure full implementation of the directives.

The CBN stipulated that the NOP limit for banks’ overall foreign currency assets and liabilities should not exceed “20 per cent short or 0 per cent long of shareholders’ funds.”

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