Deposit Money Banks (DMBs) found to be frustrating the electricity power intervention by the Central Bank of Nigeria (CBN) under the Nigeria Electricity Stabilisation Facility (NESF) are to face severe sanctions, including removal from participation, the apex bank has warned. The CBN had made over N200 billion available to enable power Generation Companies (GenCos) and Distribution Companies (DisCos) have access to long-term cheap funds to enable them undertake massive investments in the sector to guarantee improved, steady power supply. However, the banks were said not to be keen in passing on the facilities to electricity companies, as they had created bottlenecks and giving various excuses to retain the funds, thereby frustrating the objectives of the intervention. Consequently, the CBN, in a circular issued by Mr. Kevin Amugo, Director, Financial Policy and Regulation Department, dated September 1, 2016 said that banks would be made to pay fines as high as N500, 000 daily if cases of infractions and failure to comply with the terms of agreements on the facilities are established against them. According to the CBN, “any bank that fails to provide the Refinancer/Administrator with statements of accounts for the Transaction Accounts within five Business Days after the end of each month, the bank would receive a Warning Letter instructing that the infraction must be remedied within 2 working days.” Governor, Central Bank of Nigeria (CBN), Mr Godwin Emefiele Further infractions would attract “a financial penalty of a minimum of N 500,000 daily until the infraction is remedied on each account that such infraction is committed. If there is a further infraction by the DMB after payment of the above financial penalty, the DMB’s participation as a Mandate Bank under the CBN-NEMSF shall be terminated. “Any bank that does not comply with the Operational Process Document (Circular) issued by the CBN pursuant to the Accounts Administration Agreement, would face similar sanctions.” The CBN also said that “closure of a Transaction Account by DMB without the prior written consent of the Refinancer would attract N2 million financial penalty, with further infractions resulting in termination of the DMB’s participation as a Mandate Bank.” It added that where Collection Banks allow revenues (including cash collections and revenues received from all electronic or other platforms) generated by any DISCO to be paid directly in any account other than the Feeder Collection Accounts as stipulated in the Account Administration Agreement, the bank must remedy it within two days and that further infractions would attract N500,000 daily until remedied. “Where DMBs open additional bank account(s) for a Beneficiary DISCO, whether or not, for the purpose of receiving payments, fines and fees for electricity consumed by its customers without the prior written consent of the Refinancer , such banks would pay a fine of N2 million on each account opened and shall be instructed by the Refinancer to close the account and transfer all funds in the account into the Principal Collection Account (PCA) within 24hours. “If the infraction is not remedied after the expiration of the 24 hours, the bank will be liable to a penalty of N2,000,000 per day for the number of days the account remains open. It could also lead to the banks’ ejection from participation in the scheme.”

Source: www.vanguardngr.com