BANKS AND OTHER FINANCIAL INSTITUTIONS ACT -

BANKS AND OTHER FINANCIAL INSTITUTIONS ACT

ARRANGEMENT OF SECTIONS

PART I

Banks

Establishment of Banks, etc.

SECTION

1. Functions, powers and duties of the Central Bank of Nigeria.

2. Banking business.

3. Application for grant of licence.

4. Investment and release of prescribed minimum paid-up share capital.

5. Power to revoke or vary conditions of licence.

6. Opening and closing of branches.

7. Restructuring, re-organisation, merger and disposal, etc., of bank.

8. Operation of foreign banks in Nigeria.

9. Minimum paid-up share capital of banks and compliance with minimum paid-up share capital requirement.

10. Shareholder’s voting rights to be proportional to shareholding.

11. Restriction of legal proceedings in respect of shares held in the name of another.

12. Revocation of licence.

13. Minimum capital ratio.

14. Non-compliance with capital ratio requirement.

15. Minimum holding of cash reserves, specified liquid assets, special deposits and stabilisation securities.

Duties of Banks

16. Maintenance of reserve fund.

17. Restriction on dividend.

18. Disclosure of interest by directors, managers and officers.

19. Prohibition of employment of certain persons and inter-locking directorship, etc.

20. Restrictions on certain banking activities.

21. Acquisition of shares in small- and medium-scale industries, agricultural enterprises and venture capital companies.

22. Restrictions on operations of merchant banks.

23. Display of interest rates.

Books of Account

24. Proper books of account.

25. Returns by banks.

26. Publication of consolidated statements.

27. Publication of annual accounts of banks.

28. Contents and form of accounts.

29. Appointment, power and report of approved auditor.

30. Relationship with specialised banks and finance houses.

Supervision

31. Appointment and power of Director of Banking Supervision and other examiners.

32. Routine examination and report thereon.

33. Special examination.

34. Power to examine books of other financial institutions and specialised banks.

35. Failing bank.

36. Control of failing bank.

37. Power over significantly under-capitalised banks.

38. Management of failing bank.

39. Power of the Bank to revoke licence or apply to court.

40. Application to the Federal High Court for winding up.

41. Legal proceedings, etc.

42. Corporation to forward returns.

General and Supplemental

43. Restrictions on the use of certain names.

44. General restriction on advertisement for deposits.

45. Power of the President to proscribe trade union.

46. Closure of bank during a strike.

47. Prohibition of the receipt of commissions, etc., by staff of banks.

48. Disqualification and exclusion of certain individuals from management of banks.

Miscellaneous Matters

49. Offences by companies, etc., and by servants and agents.

50. Offences by directors and managers or banks.

51. Penalties for offences not otherwise provided for.

52. Sharing of revenues from penalties.

53. Protection against adverse claims.

54. Priority of local deposit liabilities.

55. Application of Companies and Allied Matters Act Cap. C20.

56. Application of Nigeria Deposit Insurance Corporation Act Cap. N I 02.

57. Power to make regulations.

PART II

Other Financial Institutions

58. Prohibition of unlicensed financial institutions.

59. Application for licence.

60. Failure to comply with conditions of licence.

61. Supervisory power of the Bank.

62. Control of failing other financial institutions.

63. Application of Act to other financial institutions.

PART ill

Miscellaneous and Supplementary

64. Failure to comply with rules, etc.

65. Power as to offences and the Attorney-General’s fiat.

66. Interpretation.

67. Short title.

BANKS AND OTHER FINANCIAL INSTITUTIONS ACT

An Act to regulate banking and other financial institutions and for matters connected therewith.

[1991 No. 25.]

[20th June, 1991]

[Commencement.]

PART 1

Banks

Establishment of Banks, etc.

1. Functions, power and duties of the Central Bank of Nigeria

(1) The Central Bank of Nigeria (hereafter in this Act referred to as “the Bank”) shall have all the functions and powers conferred and the duties imposed on it under this Act, subject to the overall supervision of the Minister.

[1997 No.4.]

(2) The Bank shall in addition to the functions and powers conferred on it by this Act, have the functions and powers conferred and the duties imposed on the Bank by the Central Bank of Nigeria Act.

[1997 No.4]

(3) The Bank may authorise or instruct any officer or employee of the Bank to perform any of the functions, exercise any powers, or discharge any of its duties under this Act.

(4) The Bank may, either generally or in any particular case, appoint any person who

is not an officer or employee of the Bank, to render such assistance as it may specify in

the exercise of its powers, the performance of its functions, or the discharge of its duties

under this Act, or to exercise, perform or discharge the functions and duties on behalf of

and in the name of the Bank.

(5) For the purposes of this Act, a person shall be deemed to be receiving money as

deposits-

(a) if the person accepts deposits from the general public as a feature of its business or if it issues an advertisement or solicits for such

deposit;

(b) notwithstanding that it receives moneys as deposits which are limited to fixed

amounts or that certificates or other instruments are issued in respect of any

such amounts providing for the repayment to the holder thereof either conditionally or unconditionally of the amount of the deposits at specified

or unspecified dates or for the payment of interest or dividend on the amounts deposited at specified intervals or otherwise, or that such

certificates are transferable.

(6) Notwithstanding anything contained in this section to the contrary, the receiving

of moneys against any issue of shares and debentures offered to the public in accordance

with any enactment in force within the Federation shall not be deemed to constitute receiving moneys as deposits for the purposes of this Act.

2. Banking business

(1) No person shall carryon any banking business in Nigeria except if it is a company duly incorporated in Nigeria and holds a valid banking licence

issued under this

Act.

(2) Any person who transacts banking business without a valid licence under this Act

is guilty of an offence and liable on conviction to imprisonment for a term not exceeding

ten years or to a fine of N2,000,000 or to both such imprisonment and fine.

[1998 No. 38.]

3. Application for grant of licence

(1) Any person desiring to undertake banking business in Nigeria shall apply in

writing to the Governor for the grant of a licence and shall accompany the application

with the following-

(a) a feasibility report of the proposed bank;

(b) a draft copy of the memorandum and articles of association of the proposed

bank;

and their particulars;

(d) the prescribed application fee; and

(e) such other information, documents and reports as the Bank may, from time to

time, specify.

(2) After the applicant has provided all such information, documents and report as the

Bank may require under subsection (1) of this section, the shareholders of the proposed

bank shall deposit with the Bank a sum equal to the minimum paid-up share capital that

may be applicable under section 9 of this Act.

(3) Upon the payment of the sum referred to in subsection (2) of this section, the

Governor may issue a licence with or without conditions or refuse to issue a licence and

the Governor need not give any reasons for the refusal.

(4) Where an application for a licence is granted, the Bank shall give written notice

of that fact to the applicant and the licence fee shall be paid.

(5) An application for a licence shall be forwarded to the Governor and all licences to

be issued shall be with the prior approval of the Minister.

[1997 No.4.]

4. Investment and release of prescribed minimum paid-up share capital

The Bank may invest any amount deposited with it pursuant to section 3 (2) of this

Act in treasury bills or such other securities until such a time as the Governor shall decide

whether or not to grant a licence, and where the licence is not granted the Bank shall repay the sum deposited to the applicant, together with the investment income after deducting administrative expenses and tax on the income.

5. Power to revoke or vary conditions of licence

(1) The Bank may vary or revoke any condition subject to which a licence was

granted or may impose fresh or additional conditions to the grant of a licence.

[1998 No. 38.]

(2) Where the grant of a licence is subject to conditions, the bank shall comply with

those conditions to the satisfaction of the Bank within such period as the Bank may deem

appropriate in the circumstances.

(3) Any bank which fails to comply with any of the conditions of its licence is guilty

of an offence under this section and shall be liable on conviction to a fine not exceeding

N50,000 for each day during which the condition is not complied with.

[1998 No. 38.]

(4) Where the Governor proposes to vary, revoke or impose fresh or additional conditions on a licence, he shall, before exercising such power, give

notice of his intention to the bank concerned and give the bank an opportunity to make representation to him thereon.

(5) Any bank which fails to comply with any fresh or additional condition imposed in

relation to its licence is guilty of an offence and liable on conviction to a tine not exceeding N500,000and to an additional fine of N5,000 for each day during which the

offence continues.

[1998 No. 38.]

6. Opening and closing of branches

(1) No bank may open or close any branch office anywhere within or outside Nigeria

except with the prior consent in writing of the Bank.

(2) Any bank which contravenes the provisions of subsection (1) of this section is guilty of an offence and liable to a fine not exceedingN2,000,000

and the closure in case of the opening of a branch office and the re-opening in the case of a closure of a branch

office and in addition to a fine of N1 00,000 for each day during which the offence continues.

[1998 No. 38.]

7. Restructuring, re-organisation, mergers and disposal, etc., of bank

(1) Except with the prior consent of the Governor, no bank shall enter into an agreement or arrangement-

(a) which results in a change in the control of the bank;

(b) for the sale, disposal or transfer howsoever, of the whole or any part of the

business of the bank;

(d) for the reconstruction of the bank;

(e) to employ a management agent or to transfer its business to any such agent.

(2) Any person who contravenes the provisions of subsection (1) of this section is

guilty of an offence and liable to a fine not exceeding N1 ,000,000 and in the case of a

continuing offence to an additional fine of N10,000 for each day during which the offence continues.

[1998 No. 38.]

8. Operation of foreign banks in Nigeria

(1) Except with the prior approval of the Bank, no foreign bank shall operate branch

offices or representative offices in Nigeria.

[1998 No. 38.]

(2) The Bank may, subject to such conditions as it may impose, from time to time,

grant to any bank registered in Nigeria or a foreign bank a licence to undertake off-shore

banking business from Nigeria.

[1998 No. 38.]

(3) Subject to the provisions of subsection (I) of this section, nothing in the provisions of the Nigerian Investment Promotion Commission Act or any

other law or enactment shall be construed as authorising any person, whether as a citizen of Nigeria or a

non-Nigerian, to carryon any banking business in Nigeria without a valid banking licence issued by the Bank under this Act.

[1998 No. 38. Cap. NI17.]

(4) Any person who contravenes the provisions of subsection (1) or (3) of this section

is guilty of an offence and liable on conviction to a fine not exceeding N 1,000,000 and in

the case of a continuing offence to an additional fine of N I 0,000 for each day during

which the offence continues.

[1998 No. 38.]

9. Minimum paid-up share capital of banks and compliance with minimum paidup share capital requirement

(1) The Bank shall, from time to time, determine the minimum paid-up share capital

requirement of each category of banks licensed under this Act.

[1998 No. 38.]

(2) Any failure to comply with the provisions of this section of this Act within such

period as may be determined by the Bank, from time to time, shall be a ground for the

revocation of any licence issued pursuant to the provisions of this Act or any other Act

repealed by it.

[1998 No. 38.]

10. Shareholder’s voting rights to be proportional to shareholding

Notwithstanding the provisions of the Companies and Allied Matters Act or any

agreement or contract, the voting rights of every shareholder in a bank shall be proportional to his contribution to the paid-up share capital of the

bank.

11. Restriction of legal proceedings in respect of shares held in the name of another

Notwithstanding anything contained in any law or in any contract or instrument, no

suit or other proceedings shall be maintained against any person registered as the holder

of a share in a bank on the ground that the title to the said share vested in any person

other than the registered holder:

Provided that nothing in this section shall bar a suit or other proceeding on behalf

of a minor or person suffering from any mental illness on the ground that the registered

holder holds the share on behalf of the minor or person suffering from the mental illness.

12. Revocation of licence

The Governor may, with the approval of the Board of Directors and by notice published in the Gazette, revoke any licence granted under this Act if a bank-

(a) ceases to carryon in Nigeria the type of banking business for which the licence

was issued for any continuous period of six months or any period aggregating

six months during a continuous period of twelve months;

(b) goes into liquidation or is wound up or otherwise dissolved;

granted;

(d) has insufficient assets to meet its liabilities;

(e) fails to comply with any obligation imposed upon it by or under this Act or the

Central Bank of Nigeria Act.

[C4. 1999 No. 40.]

13. Minimum capital ratio

(1) A bank shall maintain, at all times, capital funds unimpaired by losses, in such

ratio to all or any assets or to all or any liabilities or to both such assets and liabilities of

the bank and all its offices in and outside Nigeria as may be specified by the Bank.

(2) Any bank which fails to observe any such specified ratios may be prohibited by

the bank from

(a) advertising for or accepting new deposits;

(b) granting credit and making investment;

(3) In addition, the bank may be required to draw up within a specified time a capital

reconstitution plan acceptable to the Bank.

14. Non-compliance with capital ratio requirement

(1) Failure to comply with the provisions of section 13 of this Act may constitute a

ground for the revocation of the licence of the bank under this Act.

(2) Where the Bank proposes to revoke the licence of any bank pursuant to subsection (1) of this section, the Bank shall give notice of its intention

to the bank and the bank

may within 30 days make representation (if any) to the Bank in respect thereof.

[1999 No. 40.]

15. Minimum holding of cash reserves, specified liquid assets, special deposits and

stabilisation securities

(1) Every bank shall maintain with the Bank cash reserves, and special deposits and

hold specified liquid assets or stabilisation securities, as the case may be, not less in

amount than as may, from time to time, be prescribed by the Bank by virtue of section 40

of the Central Bank of Nigeria Act.

(2) Where both assets and liabilities are due from and to other banks, they shall be

offset accordingly, and any surplus of assets or liabilities shall be included or deducted,

as the case may be, in computing specified liquid assets.

(3) In the case of the long-term advances to a bank or by an overseas branch or office

of a bank, the advances may, with the approval of the Bank, be excluded from the demand liabilities of the bank.

(4) Every bank shall-

(a) furnish within a reasonable time any information required by the Bank to satisfy the Bank that the bank is observing the requirements of

subsection (1) of

this section;

(b) not allow its holding of cash reserves, specified liquid assets, special deposits

and stabilisation securities to be less than the amount which may, from time to

time, be prescribed by the Bank;

loans or credit facilities to any person without the prior approval in writing of

the Bank.

(5) Any bank which fails to comply with any of the provisions of subsection (4) of

this section is guilty of an offence and liable to a fine of-

(a) in the case of paragraph (a) N500,000 for every month during which a default

under that paragraph (a) exists;

[1999 No. 40.]

(b) in the case of paragraph (b) N500,000 for each month of the offence;

[1998 No. 38.]

and the Bank may also, during the period when the bank fails to comply with any of the

requirements of subsection (4) as aforesaid, withdraw any privileges or facilities that are

normally accorded to the bank.

(6) For the purposes of this section, specified liquid assets, provided they are freely

transferable and free from any lien or charge of any kind, shall, without prejudice to the

provisions of section 40 of the Central Bank of Nigeria Act 1991, consist of all or any of

the following, that is-

(a) currency notes and coins which are legal tender in Nigeria;

(b) balances at the Bank;

call in Nigeria;

(d) Treasury bills and treasury certificates issued by the Federal Government;

(e) inland bills of exchange and promissory notes rediscountable at the Bank;

(f) stocks issued by the Federal Government with such dates of maturity as may

be approved by the Bank;

(g) negotiable certificates of deposit approved by the Bank; and

(h) such other negotiable instruments as may, from time to time, be approved by

the Bank for the purpose of this subsection.

Duties of Banks

16. Maintenance of reserve fund

(1) Every bank shall maintain a reserve fund and shall, out of its net profits for each

year (after due provision made for taxation) and before any dividend is declared, where

the amount of the reserve fund is-

(a) less than the paid-up share capital, transfer to the reserve fund a sum equal to

not less than thirty per cent of the net profits; or

(b) equal to or in excess of the paid-up share capital, transfer to the reserve fund a

sum equal to not less than fifteen per cent of the net profit:

Provided that no transfer under this subsection shall be made until all identifiable

losses have been made good.

(2) Any bank which fails to comply with the provisions of subsection (1) of this section is guilty of an offence and liable on conviction to a fine

of N500,000.

(3) Notwithstanding paragraphs (a) and (b) of subsection (1) of this section, the Bank

may, from time to time, specify different proportions of the net profits of each year, being

either lesser or greater than the proportion specified in paragraphs (a) and (b), to be transferred to the reserve fund of a bank for the purpose of

ensuring that the amount of the reserve fund of such bank is sufficient for the purpose of its business and adequate in relation to its liabilities.

17. Restriction on dividend

(I) No bank shall pay dividends on its shares until-

(a) all its preliminary expenses, organisational expenses, shares selling commission, brokerage, amount of losses incurred and other

capitalised expenses not

represented by tangible assets have been completely written off;

(b) adequate provisions have been made to the satisfaction of the Bank for actual

and contingent losses on risk assets, liabilities, off-balance sheet commitments

and such unearned incomes as are derivable therefrom;

pursuant to section 13 (1) of this Act.

(2) Any director, manager or officer who fails to comply with the requirements of

this section of this Act is guilty of an offence and liable on conviction to a fine of five per

cent of the dividend paid or to imprisonment for a term not exceeding three years or to

both such fine and imprisonment.

[1998 No. 38.]

18. Disclosure of interest by directors, managers and officers

(1) No manager or any other officer of a bank shall-

(a) in any manner whatsoever, whether directly or indirectly, have personal interest in any advance, loan or credit facility; and if he has any such

personal interest, he shall declare the nature of his interest to the bank;

(b) grant any advance, loan or credit facility to any person, unless it is authorised

in accordance with the rules and regulations of the bank; and where adequate

security is required by such rules and regulations such security shall, prior to

the grant, be obtained for the advance, loan or credit facility and shall be deposited with the bank;

(2) Any manager or officer who contravenes or fails to comply with any of the provisions of subsection (1) of this section is guilty of an offence

under this section and liable

on conviction to a fine of N1 or to imprisonment for a term of three years; and in

addition, any gains or benefits accruing to any person convicted under this section by

reason of such contravention, shall be forfeited to the Federal Government, and the gains

or benefit shall vest accordingly in that Government.

(3) It shall be the duty of a director of a bank who is in any way, whether directly or

indirectly, interested in the grant of an advance, loan or credit facility with the bank to

declare the nature of his interest at a meeting of the board of directors of the bank.

[1998 No. 38.]

(4) In the case of a proposed advance, loan or credit facility, the declaration required

by this section of this Act shall be made at the meeting of the board of directors of the

bank at which the request for the advance, loan or credit facility is first taken into consideration or if the director was not present on the date of

the meeting at which the mailer was discussed he shall state his interest in the proposed advance, loan or credit facility at the next meeting of the

board of directors of the bank held after he becomes so interested, and in a case where the director becomes interested in any advance, loan or

credit facility after it is granted, the declaration shall be made at the first meeting of the board of directors of the bank held after he becomes so

interested.

[1998 No. 38.]

(5) For the purpose of this section of this Act, a general notice given to the board of

directors of a bank by a director to the effect that he is a member of a company or firm

seeking an advance, loan or credit facility for the bank shall be regarded as a declaration

of his interest in the grant of the advance, loan or credit facility which may, after the date

of the notice, be granted to that company or firm, and shall be deemed to be a sufficient

declaration of interest in relation to any such advance, loan or credit facility so granted:

Provided that any such notice shall not have effect unless it is given at a meeting of

the board of directors of the bank which shall be required to do all things reasonably necessary to ensure that it is brought up and read at the next

meeting of the board of directors

of the bank after it is so given.

[1998 No. 38.]

(6) The provisions of subsection (3) of this section shall not apply in any case-

(a) where the interest of the director consists only of being a person holding less

than five per cent of the shares of the company which is seeking an advance,

loan or credit facility from the bank; or

(b) if the interest of the director may properly be regarded by the Bank as immaterial.

[1998 No. 38.]

(7) For the purpose of subsection (5) of this section, a general notice given to the

board of directors of a bank by a director shall be deemed to be a sufficient declaration of

interest in relation to any advance, loan or credit facility, if-

(a) the notice specifies the nature and extent of his interest in the company or firm

(b) such interest is not different in nature to or greater in extent than the nature and

extent specified in the notice at the time any advance, loan or credit facility is

made; and

director takes reasonable steps to ensure that it is brought up and read at the

next meeting of the board of directors of the bank after it is given.

[1998 No. 38.]

(8) Every director of a bank who holds any office or possesses any property whereby,

whether directly of indirectly, duties or interests might be created in conflict with his duties or interests as a director of a bank, shall declare at a meeting of the board of directors

of the bank, the fact and the nature, character and extent of the interest.

[1998 No. 38.]

(9) The declaration referred to in subsection (8) of this section shall be required to be

made at the first meeting of the board of directors of the bank held-

(a) after he becomes a director of the bank; or

(b) if already a director, after he came into possession of the property.

[1998 No. 38.]

(10) The secretary of the bank shall cause to be brought up and read any declaration

made under subsection (3) or (8) of this section at the next meeting of the board of directors of the bank after it is made and shall record any

declaration made under this section of this Act in the minutes of the meeting at which it was made or at the meeting at which it was brought up

and read.

[1998 No. 38.]

(11) Any director who contravenes the provisions of subsection (3) or (8) of this section

is guilty of an offence liable on conviction to a fine of N I 00,000 or imprisonment for a term

of three years or to both such fine and imprisonment.

[1998 No. 38.]

19. Prohibition of employment of certain persons and inter-locking directorship,

etc.

(1) No bank shall-

(a) employ or continue the employment of any person who is or at any time has

been adjudged bankrupt or has suspended payment to or has compounded with

his creditors or who is or has been convicted by a court for an offence involving fraud or dishonesty, or professional misconduct;

(b) be managed by a management agent except as may be approved by the Bank.

(2) Except with the approval of the Bank, no bank shall have as a director any person

who is a director of-

(a) any other bank;

excess of ten per cent of the total voting rights of all the shareholders of the

bank.

(3) No bank shall be managed by any person who is-

(a) a director of any other company not being a subsidiary of the bank; or

(b) engaged in any other business or vocation.

(4) Every director of a bank shall sign a code of conduct in such form or manner as

the Bank may, from time to time, prescribe.

(5) The chief executive of a bank shall cause all the officers of the bank to sign a

code of conduct as may be approved by the board of directors.

20. Restrictions on certain banking activities

(1) A bank shall not, without the prior approval in writing of the Bank, grant-

(a) to any person any advance, loan or credit facility or give any financial guarantee or incur any other liability on behalf of any person so that

the total value of the advance, loan, credit facility, financial guarantee or any other liability in respect of the person is at any time more than

twenty per cent of the shareholders fund unimpaired by losses or in the case of a merchant bank not more than fifty per cent of its shareholders

fund unimpaired by losses; and for the purpose of this paragraph all advances, loans or credit facilities extended to any person shall be aggregated

and shall include all advances, loans or credit facilities extended to any subsidiaries or associates of a body corporate:

Provided that the provisions of this paragraph shall not apply to transactions

between banks or between branches of a bank or to the purchase of clean or

documentary bills of exchange, telegraphic transfers or documents of title to

goods the holder of which is entitled to payment for exports from Nigeria or to

advance made against such bills, transfers or documents;

(b) any advances, loans or credit facilities against the security of its own shares or

any unsecured advances, loans or credit facilities unless authorised in accordance with the bank’s rules and regulations and where any such rules and

regulations require adequate security, such security shall be provided or, as the

case may require, deposited with the bank.

(2) A bank shall not, without the prior approval in writing of the Bank-

(a) permit to be outstanding, unsecured advances, loans or unsecured credit facilities, of an aggregate amount in excess ofN50,000-

[1999 No. 40.]

(i) to its directors or any of them whether such advances, loans or credit facilities are obtained by its directors jointly or severally;

(ii) to any firm, partnership or private company in which it or anyone or more of its directors is interested as director, partner, manager or agent

or any individual firm, partnership or private company of which any of its directors is a guarantor;

(iii) to any public or private company in which it or anyone or more of its

directors jointly or severally maintains shareholding of not less than

five per cent either directly or indirectly;

(b) permit to be outstanding to its officers and employees, unsecured advances,

loans or unsecured credit facilities, which in the aggregate for anyone officer

or employee, is an amount which exceeds one year’s emolument to such officer of employee;

retail trade, including the import or export trade, except in so far as may exceptionally be necessary in the course of the banking operations and

services of that bank or in the course of the satisfaction of debts due to it; so however that nothing in this paragraph shall be construed as

precluding a bank from undertaking equipment leasing business or debt factoring provided that the fore-going provisions of this paragraph shall

not apply to a bank in the circumstances permitted under section 21 of this Act;

(d) without prejudice to the provisions of section 2 J of this Act, acquire or hold

any part of the share capital of any financial or commercial or other undertaking, except-

(i) any shareholding approved by the Bank in any company set up for the

purpose of promoting the development of the money market or capital

market in Nigeria or of improving the financial machinery for financing economic development;

(ii) any shareholding approved by the Bank pursuant to sub-paragraph (1)

of this paragraph, the aggregate value of which does not at any time

exceed twenty-five per cent of the sum of paid-up share capital and

statutory reserves of that bank;

(iii) all shareholding acquired by a merchant bank while managing an equity issue:

Provided that the aggregate value of such acquisition does not at any time

exceed the sum of the paid-up share capital of that merchant bank or ten per

cent of its total assets, excluding contract items, whichever is higher and that

this paragraph shall not apply to any nominee company of a bank which deals

in stock and shares for or on behalf of the bank’s customers or clients or majority interest acquired by a merchant bank in a company while

managing an equity issue;

(e) remit, either in whole or in part, the debts owed to it by any of its directors or

past director;

(f) purchase, sell, dispose, acquire or lease any real estate for whatever purpose.

[1998 No. 38.]

(3) Notwithstanding the foregoing provisions of this section, a bank may secure debt

on any real or other property, and in default of repayment, may acquire such property and

exercise any power of sale as may be provided for in any instrument or, by law prescribed, immediately upon such default or as soon thereafter as

may be deemed proper.

(4) In paragraphs (a) and (b) of subsection (2) of this section, the expressions “unsecured advances and loans” or “unsecured credit

facilities”, mean advances, loans or credit facilities made without security, or, in respect of any advances, loans or credit facilities made with

security, any part thereof which at any time exceeds the market value of the assets constituting the security, or where the bank is satisfied that

there is no established market value, the value of the assets as determined on the basis of a valuation approved by the bank.

(5) In paragraphs (a) and (e) of subsection (2) of this section, the expression “director”, includes director’s wife, husband, father, mother, brother,

sister, son, daughter and their spouses.

(6) All the directors of a bank shall be liable jointly and severally to indemnify the

bank against any loss arising from any unsecured advances, loans or credit facilities under paragraph (a) of subsection (2) of this section.

(7) Any director, manager or officer who fails to comply with the requirements of

this section of this Act is guilty of an offence and liable on conviction to a fine not exceeding N 100,000 or to imprisonment for a term of three years and shall in addition be

required to repay the loan or forfeit his known assets in lieu of the unpaid loan.

[1998 No. 38.]

(8) Any bank which after the commencement of this Act, enters into any transaction

which is inconsistent with the requirement of subsection (7) of this section is guilty of an

offence and liable on conviction to a fine of N 1,000,000.

[1998 No. 38.)

(9) Any bank which, after the commencement of this Act, enters into any transaction

which is inconsistent with any of the provisions of subsection (1) or (2) of this section, is

guilty of an offence and liable on conviction to pay to the Bank a fine of N 100,00 for

each day during which the transaction continues.

[1997 No.4.)

21. Acquisition of shares in small- and medium-scale industries, agricultural enterprises and venture capital companies

(1) A bank may acquire or hold part of the share capital of any agricultural, industrial

or venture capital company subject to the following conditions, that is-

(a) the venture capital company is set up for the purpose of promoting the development of indigenous technology or a new venture in

Nigeria;

(b) the shareholding by the bank is in small- or medium-scale industry, and agricultural enterprises as defined by the Bank;

(c) the shareholding by the bank in any medium-scale industry, agricultural enterprise or venture capital company or any other business

approved by the Bank shall not be more than ten per cent of the bank’s shareholders fund unimpaired by losses and shall not exceed forty per cent

of the paid-up share capital of the company, the shares of which are acquired or held;

(d) the aggregate value of the equity participation of the bank in all enterprises

pursuant to this section does not at any time exceed, in the case of a commercial bank, twenty per cent of its shareholders fund unimpaired by

losses or, in the case of a merchant bank, not more than fifty per cent of its shareholders fund unimpaired by losses:

Provided that a bank may hold shares acquired in the course of the satisfaction of

any debt owed to it.

(2) Without prejudice to the provisions of subsection (1) of this section, a bank may

hold or acquire share capital of any other business, subject to the approval of the Bank.

(3) Every bank shall, within 21 days of the acquisition of any shareholding pursuant

to subsection (1) of this section, give full particulars thereof to the Bank.

(4) Any bank which fails to comply with the provisions of subsection (3) of this section is guilty of an offence and liable on conviction to a fine

of N1,000 for each day during which the offence continues.

[1999 No. 40.)

22. Restrictions on operations of merchant banks

(1) A merchant bank shall not-

(a) accept any deposit withdrawable by cheque;

(b) accept any deposit below an amount which shall be prescribed, from time to

time, by the Bank;

(c) hold for more than six months any equity interest acquired in a company while managing an equity issue, except as stipulated in section 21

of this Act.

(2) Any merchant bank which acts in contravention of or fails to comply with any of the provisions of this section is guilty of an offence and liable to

a fine not exceeding

N25,000 for each day during which the offence continues.

[l998 No. 38.]

23. Display of interest rates

(1) Every bank shall display at its offices its lending and deposit interest rates and

shall render to the Bank information on such rates as may be specified from time to time

by the Bank:

Provided that the provisions of this subsection shall not apply to profit and loss

sharing banks.

(2) Any bank in breach of any of the provisions of this section is guilty of an offence

and liable to a fine not exceeding N5,000 for every day during which the offence continues.

[l998 No. 38.]

Books of Account

24. Proper books of account

(1) Every bank shall cause to be kept proper books of account with respect to all the

transactions of the bank.

(2) For the purpose of subsection (1) of this section, proper books of account shall be

deemed to be kept with respect to all transactions if such books as are necessary to explain such transactions and give a true and fair view of the state of affairs of a bank, are

kept by the bank and are in compliance with the accounting standard as may be prescribed for banks.

(3) The books of account shall be kept at the principal administrative office of a bank

and at the branches of each bank in the English language or any other language approved

by the Federal Government.

(4) Where the books of account kept by a bank with respect to all its transactions, are

prepared and kept in such a manner that, in the opinion of the Bank, they have not been

properly prepared and kept, or where a bank renders returns in accordance with the provisions of section 25 of this Act, which in the opinion of the

Bank are inaccurate, the Bank

may appoint a firm of qualified accountants to prepare proper books of account or render

accurate returns, as the case may be, for the bank and the cost of preparing the accounts

and rendering the returns shall be borne by the bank.

(5) If any person being a director, manager or officer of a bank-

(a) fails to take all reasonable steps to secure compliance with any of the provisions of this section;

(b) has by his wilful act been the cause of any default thereof by the bank,

he is guilty of an offence and liable, in respect of paragraph (a) of this subsection, to a

fine of N 100,000 and in respect of paragraph (b) of this subsection, to a fine of N50,000

or to imprisonment for a term not exceeding ten years or to both such fine and imprisonment.

[1999 No. 40.]

25. Returns by banks

(1) Every bank shall submit to the Bank not later than 28 days after the last day of

each month or such other interval as the Bank may specify, a statement showing-

(a) the assets and liabilities of the bank; and

(b) an analysis of advances and other assets, at its head office and branches in and

outside Nigeria in such form as the Bank may specify, from time to time.

(2) Every bank shall submit such other information, documents, statistics or returns

as the Bank may deem necessary for the proper understanding of the statements supplied

under subsection (1) of this section.

(3) Any bank which fails to comply with any of the requirements of subsection (1) or

(2) of this section is, in respect of each such failure, guilty of an offence and liable to a

fine not exceeding N25,000 for each day during which the offence continues.

[1998 No. 38.]

26. Publication of consolidated statements

(1) The statements and information submitted by each bank under section 25 of this

Act shall be regarded as confidential:

Provided that the Bank shall furnish any such statement or information to any

agency of Government as required by law.

(2) Notwithstanding anything in this section, the Bank may prepare and publish consolidated statements aggregating the statements furnished

under section 25 of this Act for

each category of banks.

27. Publication of annual accounts of banks

(1) Subject to the prior approval in writing of the Bank, a bank shall not later than

four months after the end of its financial year-

(a) cause to be published in a daily newspaper printed in and circulating in Nigeria and approved by the Bank;

(b) exhibit in a conspicuous position in each of its offices and branches in Nigeria;

and

copies of the bank’s balance sheet and profit and loss account duly signed and containing

the full and correct names of the directors of the bank.

(2) Every published account of a bank, under subsection (1) of this section, shall disclose in detail penalties paid as a result of contravention of the

provisions of this Act and provisions of any policy guidelines in force during the financial year in question and the auditor’s report shall reflect such

contravention.

(3) The balance sheet and profit and loss account of a bank shall bear on their face

the report of an approved auditor and shall contain statements on such matters as may be

specified by the Bank, from time to time.

(4) For the purpose of subsection (3) of this section, an “approved auditor” shall be

an auditor approved for the purpose of section 29 of this Act.

(5) Any bank which fails to comply with any of the requirements of this section is in

respect of each such failure guilty of an offence and liable on conviction to a fine of

N 10,000 each day during which the offence continues.

[1999 No. 40.]

28. Contents and form of accounts

(1) Every balance sheet and every profit and loss account of a bank shall give a true

and fair view of the state of affairs of the bank as at the end of the reporting period.

(2) Every balance sheet and every profit and loss account of a bank forwarded to

the Bank in accordance with the provisions of subsection (1) of this section and section 27 (1) (c) of this Act shall comply with the requirements of

any circular which has been issued by the Bank thereon.

(3) Any person being a director of any bank who fails to take all reasonable steps to

secure compliance with any of the provisions of this section in respect of any accounts is

guilty of an offence and liable to pay to the Bank a fine of N 1 ,000 or to imprisonment for

five years or to both such tine and imprisonment.

[1999 No. 40.]

29. Appointment, power and report of approved auditor

(1) Every bank shall appoint annually a person approved by the Bank, in this section

referred to as “the approved auditor”, whose duties shall be to make to the shareholders a

report upon the annual balance sheet and profit and loss account of the bank and every

such report shall contain statements as to the matters and such other information as may

be prescribed, from time to time, by the Bank.

(2) For the purpose of this section, the approved auditor shall be an auditor who is-

(a) a member of one of the professional bodies recognised in Nigeria;

(b) approved by the Bank;

(d) carrying on in Nigeria professional practice as accountant and auditor.

(3) Any person-

(a) having any interest in a bank otherwise than as a depositor; or

(b) who is a director, officer or agent of a bank; or

(d) who is indebted to a bank,

shall not be eligible for appointment as the approved auditor for that bank;

(e) and a person appointed as such auditor who subsequently-

(i) acquires such interest; or

(ii) becomes a director, officer or agent of the bank; or

(iii) becomes indebted to a partner in a firm in which a director of a bank is

interested as partner or director, shall cease to be such auditor.

(4) If any bank fails to appoint an approved auditor under subsection (1) of this section the Bank shall appoint a suitable person for that purpose

and shall fix the remuneration to be paid by the bank to such auditor.

(5) Any approved auditor under this section who acts in contravention of or fails deliberately or negligently to comply with any of the provisions of

this section is guilty of an offence and liable on conviction to pay to the Bank a fine of not less than N200,000 and not exceeding N500,000.

[1997 No.4. 1998 No. 38.]

(6) The report of the approved auditor shall be read together with the report of the

board of directors at the annual general meeting of the shareholders of the bank and two

copies of each report together with the auditor’s analysis of bad and doubtful advances in

a form specified, from time to time, by the Bank shall be sent to the Bank.

(7) If an auditor appointed under this section, in the course of his duties as an auditor

of a bank, is satisfied that-

(a) there has been a contravention of this Act, or that an offence under any other

law has been committed by the bank or any other person; or

(b) losses have been incurred by the bank which substantially reduce its capital

funds; or

bank, or any other irregularity has occurred; or

(d) he is unable to confirm that the claims of depositors or creditors are covered by

the assets of the bank,

he shall immediately report the matter to the Bank.

(8) The approved auditor shall forward to the Bank two copies of the domestic reports on the bank’s activities not later than three months after the end of the bank’s financial year.

(9) Any approved auditor under this section who acts in contravention of or fails deliberately or negligently to comply with any of the provisions of

this section of this Act is guilty of an offence and liable on conviction to a tine not exceeding N500,000 and where the approved auditor is a firm,

the individual partner or partners shall in addition be liable on conviction to imprisonment for a term not exceeding five years and to the fine

required to be paid by the firm under this subsection.

[1998 No. 38.]

(10) The appointment of an approved auditor shall not be determined without prior

approval of the Bank.

30. Relationship with specialised banks and finance houses

(1) As from the commencement of this Act, the Governor shall have power to examine, from time to time, the accounts and other books of the

Nigeria Industrial Development Bank, the Nigeria Agricultural and Cooperative Bank, the Nigeria Bank for Commerce and Industry, the Urban

Development Bank, all Mortgage Institutions, Community Banks and the Peoples Bank and such other specialised banks.

(2) The Bank shall also have power to examine the accounts of bureaux de change,

discount houses and such other financial institutions and in that regard have power to

issue reports, from time to time, regarding the accounts of such financial institutions.

(3) The periodic reports and findings of the Bank in relation to the said specialised

banks and other financial institutions shall be forwarded to the Head of State through the

Minister.

(4) For the purpose of implementation of this section, the specialised banks and other

financial institutions shall be treated in the same manner as other banks with respect to

the requirements of section 24 of this Act.

[1997 No.4.]

Supervision

31. Appointment and power of Director of Banking Supervision and other examiners

(1) There shall be an officer of the Bank who shall be appointed by the Governor to

be known as the Director of Banking Supervision or by such other title as the Governor

may specify.

(2) The Director of Banking Supervision shall have power to carry out supervisory

duties in respect of banks and other financial institutions and specialised banks and or

that purpose shall-

[1998 No. 38.]

(a) under conditions of confidentiality, examine periodically the books and affairs

of each bank;

(b) have a right of access at all times to the books, accounts and vouchers of

banks;

information and explanation as he deems necessary to the performance of his

duties under this section.

(3) The Governor shall appoint to assist the Director of Banking Supervision such

other officers of the Bank as the Governor may, from time to time, decide.

(4) The officers may be designated examiners or have such other titles as the Governor may specify.

(5) For the purpose of this section, references to examiners are references to the Director of Banking Supervision and any officer of the Bank appointed pursuant to subsection (3) of the section.

(6) In examining the affairs of any bank under this Act, it shall be the duty of an examiner at all times to avoid unreasonable hindrance to the daily

business of the bank.

(7) Every bank shall produce to the examiners at such times as the examiners may

specify, all books, accounts, documents and information which they may require.

(8) If any book, document or information is not produced in accordance with the requirement of an examiner under this section or what is

produced or furnished to an examiner is false in any material particular, the bank is guilty of an offence and liable on conviction to pay to the Bank

a fine of N100,000 and in addition, to a fine of N10,000 for each day during which the offence continues.

[1997 No.4. 1998 No. 38.]

32, Routine examination and report thereon

(1) The Governor shall, in the case of routine examination, forward a copy of the report arising from the examination together with the recommendations of the Bank, to the

bank concerned with instruction that it be placed before the meeting of the board of directors of the bank specially convened for the purpose of

considering the report and the recommendations thereon.

[1998 No. 38.]

(2) The bank shall within two weeks convey to the Governor the board of director’s

reactions to the report and its proposal for implementing the recommendations of the

Bank.

(3) Any bank which fails to comply with the provisions of subsection (1) or (2) of

this section is guilty of an offence and liable to the Bank for a fine not exceeding

N25,000 for each day during which the offence continues and if the offence continues for

more than 30 days, the Bank may in addition to the fine, withdraw any privilege or facility granted to that bank by the Bank.

33. Special examination

(1) The Governor shall have power to order a special examination or investigation of

the books and affairs of a bank where he is satisfied that-

(a) it is in the public interest so to do; or

(b) the bank has been carrying on its business in a manner detrimental to the interest of its depositors and creditors; or

(d) the bank has been contravening the provisions of this Act; or

(e) an application is made therefore by-

(i) a director or shareholder of the bank; or

(ii) a depositor or creditor of the bank:

Provided that in the case of paragraph (e) of this subsection, the Governor may not

order a special examination or investigation of the books and affairs of a bank if he is

satisfied that it is not necessary to do so.

(2) For the purpose of subsection (1) of this section, the Governor shall have power

to appoint one or more qualified persons other than the officers of the Bank to conduct

special examination or investigation, under conditions of confidentiality, of the books and

affairs of the bank.

(3) Nothing in this section or in any other section of this Act shall be construed as

precluding the Governor from appointing one or more officers of the Bank as examiners

apart from those mentioned in section 32 of this Act and ascribing to such officers such

other designations as he deems fit, and from directing or requiring all or any of the officers to exercise all or any of the powers of the Director of

Banking Supervision under this

Act.

(4) The Governor shall have power to order that all expenses of or incidental to an

examination or investigation be paid by the bank examined or investigated.

34. Power to examine books of other financial institutions and specialised banks

(1) Notwithstanding the powers of the Bank specified in this Act, as amended, the

Bank shall have power, from time to time, to examine the books and affairs of-

(a) the Nigerian Industrial Development Bank;

(b) the Nigerian Agricultural and Co-operative Bank;

(d) the Nigerian Bank for Commerce and Industry;

(e) the Urban Development Bank;

(f) the Federal Mortgage Bank of Nigeria and all primary mortgage institutions;

(g) Community banks;

(h) Peoples Bank of Nigeria;

(i) bureaux de change;

(j) discount houses,

and such other financial institutions and specialised banks as may be specified, from time

to time, by the Bank.

(2) The periodic reports and findings of the Bank in relation to the other financial institutions and specialised banks together with the recommendations of the Bank shall, in

specific cases, be forwarded to the appropriate Minister for necessary action.

(3) For the purposes of implementation of this section of this Act, the other financial

institutions and specialised banks shall be treated in the same manner as other banks with

respect to the requirements of section 24 of this Act.

[1998 No. 38.]

35. Failing bank

(1) Where a bank informs the Bank that-

(a) it is likely to become unable to meet its obligations under this Act; or

(b) it is about to suspend payment to any extent; or

(d) where, after an examination under section 33 of this Act or otherwise how soever, the Bank is satisfied that the bank is in a grave

situation as regards the

matters referred to in section 33 (1) of this Act, the Governor may by order in writing exercise anyone or more of the powers specified in subsection

(2) of this section.

(2) The Governor may by order in writing under subsection (1) of this section-

(a) prohibit the bank from extending any further credit facility for such period as

may be set out in the order, and make the prohibition subject to such exceptions, and impose such conditions in relation to the exceptions as may

be set out in the order, and from time to time, by further order similarly made, extend the aforesaid period;

(b) require the bank to take any steps or any action or to do or not to do any act or

thing whatsoever, in relation to the bank or its business or its directors or officers which the Bank may consider necessary and which is set out in

the order, within such times as may be stipulated therein;

be set out in the order, any manager or officer of the bank, notwithstanding

anything in any written law, or any limitations contained in the memorandum

and articles of association of the bank;

[1999 No. 40.]

(d) in respect of a bank, notwithstanding anything in any written law or any limitations contained in the memorandum and articles of

association of the bank,

and in particular, notwithstanding any limitation therein as to the minimum or

maximum number of directors, for reasons to be recorded in writing-

(i) remove from office, with effect from such date as may be set out in the

order, any director of the bank; or

(ii) appoint any person or persons as a director or directors of the bank, and

provide in the order for the person or persons so appointed to be paid

by the bank such remuneration as may be set out in the order;

(e) appoint any person to advise the bank in relation to the proper conduct of its

business, and provide in the order for the person so appointed to be paid by the

bank such remuneration as may be set out in the order.

36. Control of failing bank

If after taking such of the steps stipulated in section 35 of this Act or such other

measures as in the opinion of the Bank may be appropriate in the circumstance, the state

of affairs of the bank concerned does not improve, the Bank may turn over the control

and management of such bank to the Nigeria Deposit Insurance Corporation (hereinafter

in this Act referred to as “the Corporation”) on such terms and conditions as the Bank

may stipulate from time to time.

[1998 No. 38.]

37. Power over significantly under-capitalised banks

Where the Corporation has assumed control over a bank as provided under section 36

of this Act and such bank is significantly under-capitalised to the extent that its risk

weighted assets ratio is below five per cent but above two per cent, the Corporation

may-

(a) require the bank to submit a recapitalisation plan acceptable to the Corporation

within a stipulated period; or

(b) prohibit the bank from extending any further credit and incurring any additional capital expenditure without the approval of the

Corporation; or

such steps or to do or not to do any act or thing whatsoever in relation to the

business of the bank or its directors or officers, which the Corporation may

consider necessary within such time as the Corporation may stipulate; or

(d) with the approval of the Bank remove, for reasons to be recorded in writing

and with effect from any date as may be specified, any director, manager, officer or employee of the bank; or

(e) appoint, with the approval of the Bank, any person or persons as a director or

directors of the bank and cause their remuneration to be provided by the bank.

[1998 No. 38.]

38. Management of failing bank

(1) Where the Corporation has assumed control of the business of a bank pursuant to

section 36 of this Act, the Corporation shall remain in control of and continue to carry on

the business of the bank in the name and on behalf of the bank until such a time as in the

opinion of the Bank, it is no longer necessary for the Corporation to remain in control of

the business of the bank.

[1998 No. 38.]

(2) Accordingly, the cost and expenses of the Corporation or remuneration of an appointed person of the bank shall be a first charge on the assets

of the bank.

39. Power of the Bank to revoke licence or apply to court

In the event that the bank over which the Corporation has assumed control cannot be

rehabilitated, the Corporation may recommend to the Bank other resolution measures

which may include the revocation of the bank’s licence.

[1990 No. 40. 1998 No. 38.]

40. Application to the Federal High Court for winding up

Where the licence of a bank has been revoked pursuant to section 39 of this Act, the

Corporation shall apply to the Federal High Court for a winding up order of the affairs of

the bank.

[1998 No. 38.]

41.Legal proceedings, etc.

(1) Notwithstanding anything to the contrary contained in any law or enactment, no

suit shall be instituted against a bank whose control has been assumed by the Corporation.

(2) If any such proceeding is instituted in any court or tribunal against the bank, it

shall abate, cease or be discontinued without further assurance other than this Act.

[1998 No. 38.]

42. Corporation to forward returns

The Corporation shall, while acting as the liquidator of a licensed bank, forward to the

Bank copies of any returns which it is required to make, from time to time, by the Bank.

[1998 No. 38.]

General and Supplemental

43. Restrictions on the use of certain names

(1) Except with the written consent of the Governor-

(a) no bank shall as from the commencement of this Act, be registered or incorporated with a name which includes the words “Central”,

“Federal”, “Federation”, “National”, “Nigeria”, “Reserve”, “State”, “Christian”, “Islamic”, “Moslem”, “Quoranic”, or “Biblical”;

(b) no person other than a bank licensed under this Act shall or continue to use the

word “bank” or any of its derivatives, either in English or in any other language in the description or title under which the person is carrying on

business

in Nigeria:

Provided that paragraph (b) of this subsection shall not apply to banking institutions referred to in section 53 of this Act.

(2) Every bank shall use as part of its description or title the word “bank” or anyone

or more of its derivatives, either in English or in some other language.

(3) Subsection (1) of this section shall not apply to any registered association of

banks, bankers or bank employees formed for the protection of their mutual interest or in

furtherance or promotion of education and training of personnel for financial institutions

in Nigeria.

(4) Any person who acts in contravention of this section is guilty of an offence and

liable on conviction to a tine not exceeding N50,000 for each day during which the offence continues.

[1997 No.4. 1998 No. 38.]

44. General restriction on advertisement for deposits

(1) No person other than a bank or any other person authorised to take deposits shall

issue any advertisement inviting the public to deposit money with it.

(2) Any person who issues an advertisement in contravention of the provisions of

subsection (1) of this section is guilty of an offence and liable on conviction to a fine of

N500,000 or to imprisonment for a term of ten years or to both such fine and imprisonment.

[1997 NO.4. 1998 No. 38.]

(3) Where any bank proposes to issue any advertisement, the bank shall deliver to the

Bank the text of the proposed advertisement together with the bank’s latest published

accounts, and shall thereafter comply with such directives and conditions as the Bank

may prescribe and such text shall be regarded as confidential information.

(4) Any bank which fails to comply with the provisions of subsection (3) of this section is guilty of an offence and liable to a fine of N50,000 and the

bank shall in addition pay a fine of N1 ,000 for every day during which an advertisement issued in contravention of subsection (3) of this section

continues.

(5) In this Act, “advertisement” includes any form of advertising whether in publication or by the display of notice or by means of circular or other

document or by any exhibition of photographs or cinematograph or by way of sound broadcasting or television or loudspeakers or other public

address systems and reference to the issuing of an advertisement shall be construed accordingly; and for the purposes of this Act, an

advertisement issued by any person by way of display or exhibition in a public place shall be treated as issued by him on every day on which he

causes or permits it to be so displayed

or exhibited.

(6) An advertisement which contains information calculated to lead directly or indirectly to the deposit of money by the public shall be treated as

an advertisement inviting

the public to deposit money.

(7) An advertisement issued by any person on behalf of or to the order of another

person shall be treated as an advertisement issued by that other person and for the purpose of any proceedings under this Act, an advertisement

inviting the public to deposit money with a person specified in the advertisement shall be presumed, unless the contrary is proved, to have been

issued by the person.

45. Power of the President to proscribe trade union

(1) If the President is satisfied that any trade union, the members of which are employed in a bank, has been engaged in acts calculated to disrupt

the economy of Nigeria, he may by order published in the Gazette proscribe that union (hereafter in this section referred to as “a proscribed

union”) which shall, as from the date of the order, cease to

exist.

(2) A proscribed union shall, not later than fourteen days from the date of the order

under subsection (1) of this section, surrender its certificate of registration to the Registrar who shall take such steps in relation to the distribution

of the assets of the union as he deems necessary or in accordance with the registered rules of the union.

(3) No person who immediately before the date of an order under this section was an

officer of a proscribed union shall at any time after that date be an officer of any trade

union any of the members of which are employed by a bank.

(4) If the certificate of registration of a proscribed union is not delivered to the Registrar as required under subsection (2) of this section, every

person who immediately before the proscription of the union was an officer thereof is guilty of an offence and liable on conviction to a fine of

#5,000 or to imprisonment for six months or to both such fine and imprisonment.

(5) Any person who contravenes subsection (3) of this section is guilty of an offence

and liable on conviction to imprisonment for a term of five years without an option of a

fine.

(6) In this section-

“officer” in relation to a union, means any person holding official position in that

trade union and, accordingly, includes in particular, any president, secretary or treasurer

thereof and every member of the committee of management however described;

“Registrar” means the Registrar of Trade Unions appointed under section 46 of the

Trade Unions Act.

46. Closure of bank during a strike

(1) No bank shall incur any liability to any of its customers by reason only of failure

on the part of the bank to open for business during a strike.

(2) If as a result of a strike, a bank fails to open for business, the bank shall, within 24

hours of the beginning of the closure, obtain the approval of the Bank for any continued

closure of the bank.

47. Prohibition of the receipt of commissions, etc., by staff of banks

(1) Any director, manager, officer or employee of a bank or any other person receiving remuneration from the bank, who asks for, receives, consents

or agrees to receive any gift, commission, employment, service, gratuity, money, property or thing of value for his own personal benefit or

advantage or for that of any of his relations, from any person-

(a) for procuring or endeavouring to procure for any person any advances, loans or

credit facility from the bank;

(b) for the purpose or discount of any draft, note, cheque, bill of exchange or other

obligation by that bank; or

proper authority or compliance with rules and guidelines for that purpose,

is guilty of an offence and liable on conviction to pay to the Bank a fine of #50,000 or

imprisonment for a term of five years or to both such fine and imprisonment and in addition any such gift or any other commission shall be

forfeited to the Federal Government.

[1998 No. 38.]

(2) The provisions of subsection (I) of this section shall not in any manner derogate

from, and shall be without prejudice to any other written law relating to corruption or

illegal gratification.

48. Disqualification and exclusion of certain individuals from management of

banks

(1) Every bank shall, before appointing any director or chief executive, seek and obtain the Bank’s written approval for the proposed appointment.

(2) No person shall be appointed or shall remain a director, secretary or an officer of

a bank who-

(a) is of unsound mind or as a result of ill health is incapable of carrying out his

duties; or

(b) is declared bankrupt or suspends payments or compounds with his creditors

including his bankers; or

(d) is guilty of serious misconduct in relation to his duties; or

(e) in the case of a person possessed of professional qualification, is disqualified

or suspended (otherwise than of his own request) from practising his profession in Nigeria by the order of any competent authority made in

respect of him

personally.

(3) No person who has been a director of or directly concerned in the management of

a bank which has been wound up by the Federal High Court shall, without the express

authority of the Governor, act or continue to act as a director of, or be directly concerned

in the management of any other bank.

(4) Any person whose appointment with a bank has been terminated or who has been

dismissed for reasons of fraud, dishonesty or conviction for an offence involving dishonesty or fraud shall not be employed by any bank in Nigeria.

(5) Any bank which knowingly acts in contravention of subsection (1), (2), (3) or (4)

of this section is guilty of an offence and liable on conviction to a fine of N100,000.

[1999 No. 40.]

(6) Where an offence committed by a bank under subsection (4) of this section is

proved to have been committed with the knowledge or connivance of any director, manager or any other officer of the bank, he, as well as the bank, is guilty of an offence and

the director, manager or any other officer of the bank shall on conviction be liable to imprisonment for a term of not less than five years or to a

fine of N50,000 or to both such imprisonment and fine.

[1990 No. 40.]

(7) It shall not be a defence for any director, manager or officer of a bank to claim

that he is not aware of the provisions of subsection (4) of this section, except if he can

prove that he had obtained prior clearance of such a person from the secretary of the

Banker’s Committee who maintains a register of terminated, dismissed or convicted staff

of banks on the ground of fraud or dishonesty.

Miscellaneous Matters

49. Offences by companies; etc., and by servants and agents

(1) Where any offence against any provision of this Act has been committed by a

body corporate or firm, any person who was a director, manager, secretary or other similar officer of the body corporate or firm purporting to act

in such capacity shall, in addition to the body corporate or firm, be deemed to be guilty of that offence unless he proves that the offence was

committed without his consent or connivance and that he exercised all such diligence to prevent the commission of the offence as he ought to

have exercised

having regard to the nature of his functions in that capacity and to all the circumstances.

(2) Where any person would be liable under this Act to any punishment or penalty

for any act, omission, neglect or default, he shall be liable to the same punishment or

penalty for every such act, omission, neglect or default of any clerk, servant or agent or

the clerk or servant of such agent:

Provided that such act, omission, neglect or default was committed by the clerk or

servant in the course of his employment or by the agent when acting in the course of his

employment in such circumstances that had the act, omission, neglect or default been

committed by the agent, his principal would have been liable under this section.

50. Offences by directors and managers of banks

Any person, being a director or manager of a bank, who fails to-

(a) take all reasonable steps to secure compliance by the bank with the requirements of this Act; or

(b) take all reasonable steps to secure the correctness of any statement submitted

under the provisions of this Act,

is guilty of an offence and liable on conviction to a tine not exceeding N50,000 or to imprisonment for a term of three years or to both such fine

and imprisonment.

[1997 No.4. 1998 No. 38.]

51. Penalties for offences not otherwise provided for

Any bank which contravenes or fails to comply with any of the provisions of this Act

or any regulations made thereunder for which an offence or penalty is not expressly provided is guilty of an offence and liable on conviction to a fine not exceeding N50,000.

[1997 No.4. 1998 No. 38.]

52. Sharing of revenues from penalties

All revenues collected as a result of penalties imposed by this Act or any other penalties for which the Bank is responsible for collection shall be shared in the ratio of 20 per

cent to the Bank, IO per cent to the Nigeria Deposit Insurance Corporation and 70 per

cent to the Consolidated Revenue Fund.

[1997 No.4.]

53. Protection against adverse claims

(1) Neither the Federal Government nor the Bank nor any officer of that Government

or Bank, shall be subject to any action, claim or demand by or liability to any person in

respect of anything done or omitted to be done in good faith in pursuance or in execution

of, or in connection with the execution or intended execution of any power conferred

upon that Government, the Bank or such officer, by this Act.

(2) For the purpose of this section, the Minister or any officer duly acting on his behalf shall be deemed to be an officer of the Federal Government and the Governor, any

Deputy Governor of the Bank or other employee thereof or any person holding any office

therein or appointed by the Bank under subsection (2) of section 33 of this Act, shall be

deemed to be an officer of the Bank.

54. Priority of local deposit liabilities

Where a bank is unable to meet its obligations or suspends payment, the assets of the

bank in the Federation shall be available to meet all the deposit liabilities of the bank and

such deposit liabilities shall have priority over all other liabilities of the bank.

55. Application of Companies and Allied Matters Act

(1) The provisions of this Act shall apply without prejudice to the provisions of the

Companies and Allied Matters Act in so far as they relate to banks and to winding up by

the Federal High Court.

[Cap. C20.]

(2) Where any of the provisions of the Companies and Allied Matters Act are inconsistent with the provisions of this Act, the provisions of this Act

shall prevail.

56. Application of Nigeria Deposit Insurance Corporation Act

The provisions of this Act shall apply without prejudice to the provisions of the Nigeria Deposit Insurance Corporation Act and where any of the

provisions of this Act are

inconsistent with any provisions of that Act, the provisions of this Act shall prevail.

[Cap. N102.]

57. Power to make regulations

(1) The Governor may make regulations, published in the Federal Gazette, to give

full effect to the objects and objectives of this Act.

(2) Without prejudice to the provisions of subsection (1) of this section, the Governor

may make rules and regulations for the operations and control of all institutions under the

supervision of the Bank.

[1998 No. 38.]

PART II

Other Financial Institutions

58. Prohibition of unlicensed financial institutions

(1) Without prejudice to the provisions of Part I of this Act, no person shall carryon

other financial business in Nigeria other than insurance and stock broking except if it is a

company duly incorporated in Nigeria and holds a valid licence granted under section 59

of this Act.

(2) Any person or institution which, before the commencement of this Act was carrying on such other financial business as are referred to under

subsection (1) of this section, shall apply in writing to the Bank for a licence within six months from the date of commencement of this Act.

(3) Any person or institution which fails to apply as provided in subsection (2) of this

section, shall cease to carryon such financial business.

59. Application for licence

(1) Any person wishing to carryon other financial business other than insurance and

stock broking in Nigeria shall apply in writing to the Bank for the grant of a licence and

shall accompany the application with the following-

(a) a draft copy of the memorandum and articles of association of the proposed

financial business;

(b) such other information, documents and reports as the Bank may, from time to

time, specify; and

(2) After the applicant has provided all such information, documents and reports as

the Bank may require under subsection (1) of this section, the Bank may grant the licence

with or without conditions or refuse to grant the licence.

(3) Where an application for a licence is granted, the Bank shall give written notice

of that fact to the applicant and the licence fee shall be paid.

(4) The Bank may vary or revoke any conditions subject to which a licence was

granted or may impose fresh or additional conditions to the grant of a licence.

(5) Where the Bank proposes to vary, revoke or impose fresh or additional conditions, the Bank shall before exercising such power, give notice of its

intention to the person or institution concerned and give such a person or institution an opportunity to make representation to the Bank thereon.

(6) Any person who transacts business without a valid licence under section 58 of

this Act or subsection (2) of this section, whether in the case of an individual or in the

case of a body corporate, is guilty of an offence and liable-

(a) in the case of a body corporate, to a fine of N 1,000,000; and

(b) in any other case, to a fine not exceeding N 1,000,000 or imprisonment for a

term not exceeding five years or to both such fine and imprisonment.

[1999 No. 40.]

60. Failure to comply with conditions of licence

(1) Any person who fails to comply with any of the conditions of its licence is guilty

of an offence and liable on conviction to a fine not exceeding N5,000 for each day during

which the condition is not complied with.

[1997 NO.4. 1998 No. 38.]

(2) Every person or institution carrying on such financial business as are referred to

in section 56 of this Act shall-

(a) comply with the Monetary Policy Guidelines and other directives as the Bank

may, from time to time, specify;

(b) furnish within the stipulated time any statistical and other return as the Bank

may, from time to time, require.

(3) Any person who fails to comply with paragraph (a) or (b) of subsection (2) of this

section is guilty of an offence and liable on conviction to imprisonment for a term not

less than two years and not exceeding three years or to a fine of N5,000 for each day

during which such failure occurs.

[1997 NO.4. 1998 No. 38.]

(4) Persistent failure to comply with the guidelines or other directives of the Bank or

persistent refusal to supply returns in the prescribed form may be a ground for the revocation of a licence.

61. Supervisory power of the Bank

(1) The Bank shall have power to-

(a) supervise and regulate the activities of other financial institutions and specialised banks;

(b) prescribe the minimum paid-up capital requirement of other financial institutions and specialised banks.

[1998 No. 38.]

(2) The Bank may appoint examiners and any other person to carry out regular or

routine examination of the books and affairs of other financial institutions.

(3) Where the Governor is satisfied that it is in the public interest so to do he may, in

addition to the routine or regular examination, order a special examination or investigation of the books and affairs of any other financial

institution and for that purpose, the Governor shall have power to appoint one or more qualified persons other than the officers of the Bank to

conduct special examination or investigation, under conditions of confidentiality, of the books and affairs of such other financial institution.

(4) The cost and expenses of the Bank or the remuneration of the person so appointed, as the case may be, shall be payable from the fund and

property of the financial

institution.

62. Control of failing other financial institutions

(1) If, after taking such of the steps stipulated in section 35 of this Act such other measures as in the opinion of the Bank may be appropriate in the

circumstance, the state of affairs of the other financial institution concerned does not improve, the Bank may turn over the control and

management of such other financial institution to an appointed

person on such terms and conditions as the Bank may stipulate, from time to time.

(2) If, after taking such steps as specified in subsection (1) of this section as in the opinion of the Governor may be appropriate in each circumstance,

the state of affairs of

the other financial institution concerned does not improve, the Bank shall have power to revoke the licence of such other financial institution.

[1998 No. 38.]

(3) Any other financial institution whose licence is revoked pursuant to subsection (2) of this section shall be wound up by a person appointed by

the Bank.

[1998 No. 38.]

(4) The cost and expenses of the Bank or the remuneration of the person so appointed

pursuant to subsection (1) of this section shall be payable from the fund and property of

the financial institution.

[1998 No. 38.]

63. Application of Act to other financial institutions

The provisions of section 35 of this Act shall apply with such necessary modifications

to other financial institutions.

[1999 No. 40.]

PART III

Miscellaneous and Supplementary

64. Failure to comply with rules, etc.

(1) Notwithstanding any of the provisions of this Act, the Governor may impose a penalty not exceeding N2,0000,000 or suspension of any licence

issued to a bank or any other financial institution for the bank’s or other financial institution’s failure to complyN with any rules, regulations,

guidelines or administrative directives made, given or issued by the Bank under this Act.

[1998 No. 38.]

(2) The Governor may suspend any licence issued or given to any bank or any other

financial institution which fails to comply with any rules, regulations, guidelines or administrative directives made, given or issued to it by the Bank

under this Act.

[1997 No.4.]

65. Powers as to offences and the Attorney-General’s fiat

(1) The Governor of the Bank may compound any offence punishable under this Act

by accepting such sums of money as he thinks fit, not exceeding the amount of maximum

fine to which that person would have been liable if he had been convicted of the offence.

[1998 No. 38.]

(2) Any monies paid to the Governor pursuant to subsection (1) of this section, shall

be paid into the Bank’s penalty account which shall be established for that purpose.

[1999 No. 40.]

(3) No prosecution in respect of any offence under this Act shall be instituted without

The consent in writing of the Attorney-General of the Federation

[1998 No. 38.]

66. Interpretation

In this Act unless the context otherwise requires-

“associate” means a company in which another company owns not less than twenty

per cent of the shares;

“bank” means a bank licensed under this Act;

“Bank” means the Central Bank of Nigeria;

“banking business” means the business of receiving deposits on current account, savings account or other similar account, paying or collecting

cheques, drawn by or paid in by customers; provision of finance or such other business as the Governor may, by order published in the

Federal Gazette, designate as banking business;

“chief executive” in relation to a bank means a person by whatever name called, who either individually or jointly with one or more other persons,

is responsible, subject to the authority of the board of directors, for the conduct of the business and administration of the bank;

“commercial bank” means a bank in Nigeria whose business includes the acceptance

of deposits withdrawable by cheques;

“community bank” means a bank whose business is restricted to a specified geographical area in Nigeria;

“deposit” means money lodged with any person whether or not for the purpose of

any interest or dividend and whether or not such money is repayable upon demand upon a

given period of notice or upon a fixed date;

“Deputy Governor” means a Deputy Governor of the Central Bank of Nigeria;

“director” includes any person by whatever name he may be referred to carrying out or empowered to carry out substantially the same functions

of a director in relation to the affairs of a company incorporated under the Companies and Allied Matters Act;

“factoring” means the business of acquiring debts due to any person;

“Federation” means the Federal Republic of Nigeria;

“Governor” means the Governor or any of the Deputy Governors of the Central

Bank of Nigeria;

“leasing” means the business of letting or sub-letting movable property on hire for the purpose of the use of such property by the hirer or any

other person in any businesS whatsoever and where the lessor is the owner of the property regardless of whether the letting is with or without an

option to purchase the property;

“licence” means a licence issued under this Act;

“merchant bank” means a bank whose business includes receiving deposits on deposit account, provisions of finance, consultancy and advisory

services relating to corporate and investment matters, making or managing investments on behalf of any person;

“Minister” means the Minister charged with the responsibility for finance;

“other financial institution” means any individual, body, association or group of persons, whether corporate or unincorporated, other than the

banks licensed under this

Act which carries on the business of a discount house, finance company and money brokerage and whose principal objects include factoring,

project financing, equipment leasing, debt administration, fund management, private ledger services, investment management, local purchases,

order financing, export finance, project consultancy, financial consultancy, pension fund management and such other business as the Bank may,

from time to time, designate;

[1998 No. 38.]

“President” means the President of the Federal Republic of Nigeria;

“profit and loss sharing bank” means a bank which transacts investment or commercial banking business and maintains profit and loss sharing

accounts;

“relation of person” includes father, mother, child, brother, sister, uncle, aunt and

cousins where applicable, and their spouses;

“shareholders funds” means the aggregate of paid-up share capital, statutory and all

other reserves;

“specialised banks” includes Nigerian Industrial Development Bank, Nigerian Agricultural and Co-operative Bank, Nigerian Export Import Bank,

Nigerian Bank for Commerce and Industry, the Urban Development Bank, Federal Mortgage Bank of Nigeria and all Primary Mortgage Institutions,

Community Banks, Peoples Bank of Nigeria and such other banks as may be designated from time to time;

[1998 No. 38.]

“State” means any of the States of the Federation.

67. Short title

This Act may be cited as the Banks and Other Financial Institutions Act.

SUBSIDIARY LEGISLATION

No Subsidiary Legislation