Reps to Investigate Banks’ Non-compliance with CBN Directives on Net Open Position Limits

The House of Representatives has decided to investigate the non-compliance of banks and financial institutions with the Central Bank of Nigeria (CBN) directives on the Net Open Position Limits.

This move comes as a response to the concerns raised by the steady rise in the exchange rate of the Dollar in comparison to the Naira.

The motion, which was moved by Hon. Babajimi Benson, highlighted the role of the CBN in regulating the monetary policies of the country and its power to make regulations and give directives for commercial banks and certain financial institutions to implement.

The House expressed worry that the astronomical rise in the exchange rate 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 have been accused of holding 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.

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 the Dollar among which are the Net Open Position Limits and holding excess long foreign exchange.

However, there is a reluctance to implement these measures by banks and other financial institutions.

The House of Representatives has mandated the House 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.

The House also mandated the Committee on Legislative Compliance to ensure full implementation.

As the investigation unfolds, it remains to be seen how the banks and financial institutions will respond to the allegations and what measures will be taken to ensure compliance with the directives of the Central Bank of Nigeria.