The Central Bank of Nigeria (CBN) has issued new guidance limiting the suspension of payment obligations involving troubled banks and other financial institutions to a maximum period of two business days.
This means the regulator can suspend payment obligations in which a troubled bank is party to for only two days.
In a circular dated July 1 and addressed to all banks and other financial institutions, the apex bank said the clarification is intended to remove uncertainty surrounding the implementation of Sections 34(2)(b) and 40(2) of the Banks and Other Financial Institutions Act (BOFIA), 2020.
Section 34(2) (b) of the BOFIA, 2020 allows the CBN governor to suspend any payment or delivery obligations under any contract to which a failing bank is a party, while Section 40(2) empowers him to suspend the right of counterparties to terminate certain financial contracts involving a bank that is under resolution.
