Banking Reform Bill Scales Second Reading

A draft legislation to back Nigeria’s banking reforms initiated by Lamido Sanusi, Governor of the Central Bank of Nigeria (CBN), scaled the second Reading in the Senate, a week after it suffered an initial setback.
Senate abruptly stopped debate on a ‘Bill for an Act to Establish the Asset Management Corporation (AMC)’ after Joel Danlami Ikenya, Commerce Committee Chairman, drew attention of his colleagues to the absence of financial outlay of the proposed establishment.
The bill was also scaled second reading at the House of Representatives, following the adoption of the report of its Committees on Banking and Currency, Finance and Capital Market, after going through the second reading and a public hearing on Thursday 28, January 2010.
A statement by the CBN explained that “the AMCON, is the principal vehicle for resolution of the solvency of asset quality problems that have risked the banking system in the last two years and it provides an alternative to the liquidation of distressed banks. In addition to purchasing non-performing loans from the banks, AMCON is a vehicle for recapitalizing these institutions. It also holds the promise of reducing the debt overhang on capital market operators thus giving the much needed stimulus to the capital market.”
The statement signed by Mohammed Abdullahi, its spokesman expressed hopes that all skepticisms around the establishment of AMCON and unguarded speculations around political support for the reforms have been put to rest.
At the resumed debate on the bill, Teslim Folarin, Senate Leader noted that the AMC was being set up for the purpose of efficiently resolving the non-performing loan assets of banks in Nigeria and for related matters.
Folarin argued that the new law would restore confidence in the banking sector as well as empower the CBN to move fast to safeguard depositors’ funds.
The AMC was conceived by the present administration as part of the policy options for implementing the on-going reform of the banking industry.
The series of reforms initiated by the CBN is aimed at sanitising the banking sector, thus building both depositors and investors’ confidence in the industry.
The bill has been referred to the Nkechi Nwaogu-led Committee on Banking, Insurance and Other Financial Institutions to report back in two weeks.