The House of Representatives said it will investigate non-compliance by banks and financial institutions with the Central Bank of Nigeria, CBN, directives on the Net Open Position, NOP, limits.
The house mandated its committees on Banking Regulations and Banking Institutions to conduct the investigation and report back to the house.
The resolution followed the adoption of a motion by Rep. Babajimi Benson, APC-Lagos, at the plenary in Abuja on Wednesday.
He stated that there had been steady rise in the rate of the dollar in comparison to the naira, adding that such astronomical rise had been caused by diverse market forces.
Benson added that the rise as also sequel to certain economic policies adopted by the government, including the liberalisation of the dollar
The lawmaker noted that commercial banks and certain financial institutions in Nigeria usually hold back a large part of forex they obtained either through purchase, borrowing or allocation from the CBN.
He stated that rather than lending to their customers, they would withhold it with a view to selling it when the exchange rate is high.
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This speculative activity by commercial banks and certain financial institutions has further exacerbated the harsh economic situation in the country, he said.
Benson disclosed that it had led to difficulty by legitimate businesses to obtain forex for their business transactions.
He further stated that the CBN had intervened by introducing new monetary policies to check the rise in the rate of dollar among which were the net open position limits and holding excess long foreign exchange.
He said, however, commercial banks and certain financial institutions were reluctant to implement the monetary measures put in place by CBN to check such unwholesome practices by banks and other financial institutions in the country
He noted that unless drastic legislative measures were taken to enforce the implementation of these directives, the country would continue to experience dire economic hardship.
This according to him is as a result of continuous rise in foreign exchange rates. The house however, mandated the Committee on Legislative Compliance to ensure full implementation.
Credible news reports that the CBN had stated that the NOP limit of the overall foreign currency assets and liabilities of banks shall not exceed “20 percent short or 0 percent long of shareholders’ funds”.