Senate plans six-year term for CBN Gov, N1trn recapitalization for banks

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By Olugbenga Salami

Senate has set machinery in motion for amendment of the Central Bank of Nigeria, CBN Act, 2007, which will among others, make tenureship of governor of the apex bank to six years single term as against renewable five years.

It also proposed a N1 Trillion recapitalization for commercial banks which presently stands at N100 billion.

As Senate moves for sweeping reforms in the organisation, administration and function of CBN through an amendment bill read for second reading in plenary on Tuesday, its Committee on Banking, Insurance and other Financial Institutions, screened nominees for Board of Directors of the bank.

Proposal for six year single term for CBN Governor, Deputy Governors and members of Board of Directors, was contained in a bill seeking for amendment of CBN Act, 2007 and sponsored by Senator Adetokunbo Abiru (APC Lagos East) in his capacity as chairman, Senate Committee on Banking, Insurance and other Financial Institutions

Senator Abiru, in his lead debate on the bill co-sponsored by 41 other members of the committee, said six years of single term for CBN Governor, Deputy Governors and Board of Directors, said it was geared towards reducing political influence on them.

“The bill proposes to amend this provision to provide a single non-renewal term of six years for the Governor and the Deputy Governors.

“This is the practice adopted by many independent banks such as the US Federal Reserve and the European Central Bank where their Chief Executive Officers serve only one non-renewable term.

“Empirical evidence shows that a single term for the members of the Executive and Board members of central banks helps to reduce political influence on monetary policy decisions and the time inconsistency problem associated with non-independent central banks,” he said.

On the N1trillion recapitalization, Abiru in the bill said the proposal seeks to provide that the paid-up capital of the bank shall be N1 trillion and may be increased from time to time by such amount as the Government may approve either by way of transfers from the General Reserve Fund or by such other means as the government, in consultation with the board, may approve.