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FINANCIAL LAW - Banking Law

Related Topics : Banking Law . Offshore Banking Law . Broker Disputes . Commodities Law . Investment Terms . Raising Capital . Securities Law . Buying On Hire Purchase . Exchange Control Rules . Danaharta Act

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THE BANKING AND FINANCIAL INSTITUTIONS ACT, 1989

Restrictions on Investment

Section 66 of BAFIA imposes restrictions on the holding of shares in other corporations and the holding of immovable property other than is necessary for carrying on its business except where it is taken by way of security for loans. The Central Bank may approve the holding of shares in selected corporations.

Shares may also be taken to satisfy a credit facility given, for example in a debt-equity swamp. Any such shares obtained must be disposed of as soon as practicable but not later than twelve months or such longer period as the Central Bank may approve in any particular case, commencing on the date on which the same was acquired.

Powers of Supervision and Control Over Licensed Institutions

Part X of BAFIA give the Central Bank wide powers to examine and issue directives for the supervision and control of licensed institutions

Section 69 provides that the Central Bank may at any time, without giving notice, examine any of the records and transactions of a licensed institution.

Under section 70 the Minister of Finance can direct the Central Bank to examine into the affairs of any licensed institution on suspicion of any breach of BAFIA or any activity detrimental to the interests of its depositors.

Any person authorized by the Central Bank in writing may also for the above examination or investigation take possession of any books or documents. No licensed institution or its director or officer shall obstruct the examination or investigation or fail to provide any information or document.

Investigations, Search & Seizure

Under Part XI of BAFIA, the Central Bank may appoint any of its officer or any other person to be an investigating officer. Such investigating officer is given wide powers which include

power to administer an oath or affirmation to the person who is being examined
if the investigating officer has reason to believe that an offense has been committed under BAFIA, he may, inter alia :
1. enter any premises
2. seize and detain any document or take copies thereof
3. search any person in the premises and if required detain him and remove him to such place necessary, the detention shall not be longer than necessary and in any case shall not exceed 24 hours without the authorization of a Magistrate.
4. break open, examine and search any article, container or receptacle
5. order any person suspected to have committed an offense under BAFIA to furnish a statement in writing made under oath or affirmation. Where any question is put to the suspect, he shall answer the same truthfully and to the best of his knowledge and belief, and shall not refuse to answer any question on the ground that it tends to incriminate him or his spouse.

No person shall obstruct the exercise of powers by an investigating officer. If necessary the Central Bank may seek the assistance of the police or other public officer.

Duty of Secrecy

Section 97(1) provides that no director or officer of any licensed institution, whether during his tenure of office, or during his employment, or thereafter, shall give, produce, divulge, reveal, publish or otherwise disclose to any person any information or document whatsoever relating to the affairs or account of any customer.

This section does not apply to information which at the time of disclosure is or has already been lawfully available to the public from any source other than the licensed institution, or to any information supplied in a summary form which does not enable relating it to any particular customer.

The above duty of secrecy is, however, not absolute and the following exceptions are permitted.

disclose of any document or information to the Central Bank or to its director, officer or employee or to any person authorized by the Central Bank
where the customer or his personal representative, has given permission in writing to disclose
in the case where the customer is declared bankrupt, or if the customer is a corporation which is being or has been wound up
where the information is required by a party to a bona fide commercial transaction, or a prospective bona fide commercial transaction, to which the customer is also a party, to assess the creditworthiness of the customer relating to such transaction provided that the information required is of a general nature and does not enable the details of the customer's account or affairs to be ascertained
in the course of any civil proceedings between the licensed institution and its customer or his guarantor, or in interpleading proceedings sought by the licensed institution
where the licensed institution has been served a garnishee order attaching monies in the account of the customer
where the information relates solely to credit facilities given by a branch of a licensed foreign bank to its head office
where such disclosure is required under any other provision of BAFIA
where such disclosure is authorized in writing by the Central Bank
where such disclosure is authorized under any Federal Law to be made to a police officer investigating an offense specified in such law (and is limited to the account and affairs of the person suspected of the offense)
information required to be furnished under an order issued by a judge under any power conferred by the Banker's Books (Evidence) Act, 1949

Note : Unless the court otherwise orders the name address or photograph of any parties to any civil proceedings shall not be published either during or after the conclusion of the proceedings

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