Central Bank of Nigeria. Photo: CBN
The Central Bank of Nigeria has issued interpretative guidance clarifying the practical application of Sections 34(2)(b) and 40(2) of the Banks and Other Financial Institutions Act, 2020, setting a maximum period of two business days for the suspension of certain contractual obligations during the resolution of failing banks.
The clarification was contained in a circular issued on Wednesday by the Acting Director of the Financial Markets Department, Okey Umeano, who said the guidance takes immediate effect.
According to the apex bank, the absence of a clearly defined maximum duration for the exercise of its powers under the two BOFIA provisions had created uncertainty for banks, financial institutions, and their counterparties in relation to financial contracts.
The circular stated, “The Central Bank of Nigeria has observed that the absence of a defined maximum duration period pursuant to the exercise of its powers under Sections 34(2)(b) and 40(2) of the Banks and Other Financial Institutions Act, 2020 has created some uncertainty for counterparties dealing with Nigerian banks and other financial institutions in respect of financial contracts.”
