CBN bars banks from giving loans to politicians
THE Central Bank of Nigeria (CBN) has barred commercial banks from offering loans and gifts to political parties, under new industry rules. According to the apex bank, banks have been prohibited from purchasing any real estate other than for their offices and branches. The rules come into effect today.
The CBN is tightening laws after firing the chief executive officers of eight of the country’s 24 banks last year after bad debts, much of them from loans to speculators in the local stock market, threatened the industry. The CBN pumped N620 billion into banks and set up the state-owned Asset Management Corporation of Nigeria (AMCON) that will buy N2.2 trillion of bad debts from them this year.
“Banks must operate as commercial, merchant and specialised lenders, with universal banking falling away, the Central Bank said on Sunday. They have 90 days to submit a compliance plan,” it said.
Under the rules, banks won’t be allowed to give loans for people to invest in the primary issues of shares of banks,” the Central Bank said.
It will be recalled that the former Chief Executive Officer of Oceanic Bank Plc, one of those bailed out during the debt crisis, Mrs Cecilia Ibru, was convicted by a high court last month for bank fraud. She forfeited N191 billion in assets and funds, including 94 properties in the U.S., Dubai and Nigeria and shares in 100 companies, according to the Central Bank.
Posted by Darey
on 2:10 AM. Filed under