CBN issues prudential guidelines for DMBs’ operations

Central Bank of Nigeria (CBN) has issued a draft for prudential guidelines (PG)for the operations of Deposit Money Banks in the Country.
The apex bank said that the guidelines which would take effect from January 1,2020  would supersedes the prudential guidelines for DMB in Nigeria issued on June revised PG issued on June 30,  2010.

The apex regulator explained new PG become necessary to address current realities in the banking sector, stressing  that in the last nine years the Nigerian banking landscape has experienced drastic changes caused by range of issues including the crisis in the foreign exchange market, liquidity challenges, high incidence of non performing loans NPLs), poor corporate governance, increasing competition among banks fuelled by cutting edge technologies, new approaches adopted by global standard setters such as Basel  committee for banking supervision (BCBS) and international Accounting Standard board among others.

On the banks exposure to single obligor, the apex bank said the total outstanding by a bank to any person or a group of related borrowers shall not at any point in time exceeds 20 per cent of the shareholders fund unimpaired by losses while 50 per cent of a bank off balance sheet engagements shall be applied in determining the banks statutory limit to a single obligor.

The guidelines stated that for tenured positions in banks , they Chief executive officers shall serve for a maximum tenure of 10 years, nothing that in determining the length of service of a CEO, any period served in acting capacity shall be deemed to have formed part of the period of his/her service as CEO of that institution.
It further said any person  who served as CEO in a bank shall not qualify for appointment in that particular bank or subsidiaries in any capacity until after a period of three years after the expiration of tenure as CEO.

But for the Non Executive Directors, it said they are expected to remain on the board of a bank continuously for more than three terms of four years each totaling to 12 years.

It further explained that for the Governor and Deputy Governors of CBN and managing director of Nigeria Deposit Insurance Corporation (NDIC) shall not be eligible for appointment in any capacity in banks until after expiration of five years from the date of their exit from office.

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