By Francis Ogwo
As a measure of strengthening the productivity of the nation’s financial system, President Muhammadu Buhari has approved the Banks and Other Financial Institutions Act (BOFIA) 2020, which would enhance the collaboration of the executive and legislative arms in that regards.
The new Act repeals the extant Banks and Other Financial Institutions Act 1991 as amended
This was made public from a statement signed by the Senior Special Assistant to the President, Garba Shehu, on Friday
According to reports, the implication of the BOFIA 2020 approval is a boost in the working relationship between the executive and legislature arms of government towards boosting productivity and enhancement of the the effectiveness of Nigeria’s financial system.
The Act also seeks to consolidate on the existing provisions of the previous Act, especially in response to developments and significant evolution in the financial sector over the last two decades. It will increasingly encourage banks and other financial institutions to channel the much-needed credit to the real sector to support economic recovery and promote sustainable growth.
The new Act will further strengthen the efficiency and resilience of the financial system for sustainable growth and development of the Nigerian economy.
In addition, the new BOFIA 2020 also introduces a credit tribunal to improve loan recovery and address the incidence of high non-performing loans within the financial system, which has been a key deterrent to lending by financial institutions.
Details from the framework shows its potential to strengthen the regulatory and supervisory framework for the financial industry and provides additional tools for managing failing institutions and systemic distress to preserve financial stability amongst others. The Central Bank of Nigeria will hold structured engagements with stakeholders across various sectors of the economy on critical aspects of the Act in the coming months.
