Ex-CBN Chief Advocates Effective Supervision Of Banks

A Former Director in the Central Bank of Nigeria (CBN), Dr. Titus Okunronmu, on Tuesday called for effective supervision under the new banking regime.

He said in Lagos that the step was necessary to save the country from recurrence of the last financial crisis.

Okunronmu blamed poor corporate governance as the major cause of the banking crisis, stressing that many of the directives of the Central Bank of Nigeria (CBN) were not enforced.

He alleged that the banks often used their subsidiaries to perpetuate malpractices like using depositors’ funds to buy shares for their owners.

The former CBN official also alleged that banks’ directors gave loans to their friends and relations without any collateral.

He said that these sharp practices contributed to the collapse of some banks and the stock market.

Okunronmu said that some banks’ officials used depositors’ money to fund their subsidiaries, a situation that prevented banks from rendering financial services to their customers.

He said that the CBN should effectively supervise the banks under the new banking regime to provide a level playing ground for all the operators.

Reports say that the CBN introduced a new bank licensing regime under which banks were categorised as regional, commercial and a holding company.

The new banking regime took effect from November 15, 2010.