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6-Month Jail Term Awaits Naira Abusers

Vanguard
Babajide Komolafe
& Yinka Kolawole
27 June 2007

The amended Act of the Central Bank (CBN) is stipulating a jail term of six months for anyone that abuses the Naira. The Act which was recently signed into law, provides that anyone caught spraying the naira will be jailed for six months without an option of fine while anyone abusing the naira in any other way that is, writing on it, will be jailed for six months or pay a fine of N50,000.

Director Banking Supervision, CBN, Mr Ignatius Imala, at a press conference after the Bankers Committee meeting in Lagos said: "The CBN Act has been passed into law and one of the provisions is against the abuse of the currency which include hawking of naira notes. The Act has provided for sanctions against such abuses which include both monetary penalties and imprisonment."

Vanguard was reliably informed that the amended Act also stipulates that the CBN governor can only be removed through two third majority of the National Assembly. This means that the President cannot unilaterally remove the CBN Governor. The amended Act also gave the CBN liberty in the management of the nation's foreign reserves.

According to the Act, the apex bank can invest up to five percent of the foreign reserve in any development financial institution provided the level of the reserves cover for 24 months of imports.

In addition to this, the amended Act defines the core mandate of the apex bank to be price and monetary stability while it made the CBN the Economic and Financial Adviser to the Federal Government rather than just being Bankers to the Federal Government.

Meanwhile, the CBN has warned the public against patronising illegal deposit companies popularly called wonder banks. "The CBN has not given authorisation to such companies or any fund manager to raise funds from the public. In fact, fund managers are not under the jurisdiction of the CBN. That must be for the Securities and Exchange Commission (SEC)," Imala said.

"Any moment from now, the CBN will issue an advertorial to warn members of the public regarding the emergence of these wonder banks. Indeed, we leant about the NOSPETCO issue and a few others and we carried out investigations. We related with the legal units of the various banks and the position they communicated was that some of the activities of the companies do not appear to contravene any law. But we are aware that some years ago Umana-Umana was with us and we are surprised that some of these things are rearing their ugly head again.

"So, an advertorial has been drafted and any moment from now it will be published. The public should be very careful of anybody that invites you to contribute some money under the guise of raising capital or joint partnership, or whatever it is called, giving the impression that they are into all sort of activities. If anybody is into any activity requiring huge amount of funds, he should either go to the capital market or go to the banks to raise money.

"Even finance companies are not authorised to raise deposit from the system, they are only authorised to borrow money. Primary mortgage institutions (PMIs) have licences and community banks have their own licences. Apart from these, only deposit money banks are allowed to take money from members of the public. Any other company that deceives people into lodging money with it under any guise, such people will be doing so at their own risk.

"And in the advertorial we are issuing, we will bring in the aspect of the role of banks. The advertorial is also intended to warn banks too to be very wary the way they deal with some of their customers who use them to mobilise all these types of funds," he said.

Copyright © 2007 Vanguard

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