Loan to DISCOs: CBN to sanction banks

Loan to DISCOs: CBN to sanction banks

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The Central Bank of Nigeria, CBN, said it has approved a sanctions grid to commercial banks participating under the Nigeria Electricity Market Stabilisation Facility (NEMSF), the loans meant for DISCOs and GENCOs.

The bank said in a circular signed by the Director, Financial Policy and Regulation Department CBN, Kelvin Amugo, and posted on its website on Monday to all banks.

The central bank said it had approved the sanction grid to ensure compliance with the terms and conditions of the facility.

The CBN initiated a N213billion Nigeria Electricity Market Stabilization Facility (CBN-NEMSF)  after an agreement with the industry stakeholders to address debts owed by generating companies to gas suppliers.

The CBN Governor, Mr Godwin Emefiele disclosed in May that a total of N120 billion out of N213 billion had been disbursed in four tranches.

The CBN said a commercial bank would pay N10 million as penalty where its collection banks fail to provide the refinancer with a register of all accounts operated by a DISCO and domiciled with it.

It also said that the penalty was also based on failure to disclose all existing feeder collection account in respect of each Distribution Companies (DISCO) in accordance with the terms of the Accounts Administration Agreement.

The CBN, however, said that commercial banks shall provide the information within two working days and further  infraction would lead to termination of their participation as a mandate bank.

The apex bank said a commercials bank would pay a fine of N2 million if it closes a transaction account without the prior written consent of the refinancer.

It said, meanwhile, a second infraction would lead to their termination as a mandate bank.

It also stressed that sanctions that might be imposed were not limited to those listed, and the CBN might impose additional sanctions, which might include regulatory action against officers of defaulting commercial bamks

The apex bank added that and any penalties imposed as a result of sanctions might be directly offset against any fees payable to a Deposit Money Bank (DMB) under the CBN-NEMSF.

The CBN warned banks to desist from late or non-remittance of repayment sums due under the CBN-NEMS and held by the collections banks and the principal collection bank in breach of the provisions of the NEMSF Transaction Documents.

According to the CBN, this will lead to, a penalty of N2 million and shall be instructed by the refinancer to immediately transfer the funds into the Principal Collection Account (PCA) with interest at the bank’s maximum lending rate for the number of days the infraction persist.

Nigerian Online Newspaper=


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