Economy

CBN Sanctions Banks Over Power Fund

Published

8 years ago

September 6, 2016

The Central Bank of Nigeria, CBN, has threatened to sanction Deposit Money Banks, DMBs, frustrating its intervention in the power sector through the Nigeria Electricity Stabilisation Facility, NESF.

Acccording to a CBN circular dated September 1 signed by its Director, Financial Policy and Regulation Department, Mr. Kelvin Amugo, banks found guilty would face financial penalties and possible exclusion from the scheme.

It would be recalled that the apex bank had made over N200bn available to banks to offer power generation companies, GenCos and distribution companies, DisCos, long term cheap loans for improvement of power infrastructures in the country.

According to the CBN circular, “any bank that fails to provide the Refinancer/Administrator with statements of accounts for the Transaction Accounts within five Business Days after the end of each month, the bank would receive a Warning Letter instructing that the infraction must be remedied within 2 working days.”

The CBN also threatened that a financial penalty of N500,000 minimum would be paid on daily basis for infraction until the situation is remedied, while the bank maybe excluded from further participation in the CBN-NEMSF.

The circular reads further: “Any bank that does not comply with the Operational Process Document (Circular) issued by the CBN pursuant to the Accounts Administration Agreement, would face similar sanctions.”

“Closure of a Transaction Account by DMB without the prior written consent of the Refinancer would attract N2 million financial penalty, with further infractions resulting in termination of the DMB’s participation as a Mandate Bank.

“Where DMBs open additional bank account(s) for a Beneficiary DISCO, whether or not, for the purpose of receiving payments, fines and fees for electricity consumed by its customers without the prior written consent of the Refinancer, such banks would pay a fine of N2 million on each account opened and shall be instructed by the Refinancer to close the account and transfer all funds in the account into the Principal Collection Account (PCA)within 24 hours.

“If the infraction is not remedied after the expiration of the 24 hours, the bank will be liable to a penalty of N2,000,000 per day for the number of days the account remains open. It could also lead to the banks’ ejection from participation in the scheme.”