A LEGAL APPRAISAL OF THE NIGERIAN BANKING SECTOR RESOLUTION COST FUND, RESOLUTION FUND AND RESOLUTION TOOLS

Abstract

The 2020 Banks and Other Financial Institutions Act (BOFIA) incorporated the Banking Sector Resolution Fund. The provision was elaborate as it covers almost a quarter of the entire Statute, 27 out of the 129 Sections of the Statute were devoted to the fund. Prior to this development, the amended Act of the Assets Management Corporation of Nigeria (AMCON) had, in 2015, created the banking Sector Resolution Cost Fund.  This paper examines the origin and purpose of the laws and juxtaposed them with developments in other Countries.  The study examines the main provisions and the possible impact the laws would have on the banking industry and the banking community in general. The paper further observes that the cost implication of the Funds and its attendant effect on the cost of running banks, which ultimately are borne by the consumers of banking services, constitute additional burden on the banks and its customers. The Paper further observes that the Central Bank may be over-burdening the licensed banks with too many expensive responsibilities, expected to be met out of profit and eventually may dissuade investors from further investments in banking institutions; particularly when viewed from other investment opportunities available in the Country. The paper concludes that an urgent legislative reform is required to merge the two Funds and create a tenure for it in line with best practices in other parts of the world and in order to ease the burden of the banks and the bank services consuming public.