CBN To Punish Banks over Non-Disclosure Of Loans To Board Members.

The Central Bank of Nigeria (CBN) Wednesday said it would severely sanction banks that do not report credit facilities of N1 million and above availed to their board members and staff members.

The central bank gave the warning in a letter titled: ‘Reporting of all Credit Facilities of N1 million and above in the Credit Risk Management System (CRMS)’, addressed to all banks.

The letter, dated September 10, 2013, signed the Director of Banking Supervision, CBN, Mrs. Tokunbo Martins, was posted on the apex bank’s website. It expressed dismay that banks do not report credit facilities availed to their board and staff members in the CRMS.

According to the central bank, 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.

Therefore, it stressed that the “credit facilities availed to board members and staff of banks are not exempted.”

“Please note that the provisions of Sections 3.4 and 3.5 of the Prudential Guideline for Deposit Money Banks in Nigeria, July 2010, does not preclude banks from reporting credit facilities availed to its board members and staff in the CRMS.

“Banks are therefore required to report all credit facilities (principal plus interest) of N1 million and above availed to their board and staff members 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,” it explained.

 

Thisdaynewpapers, reports.