The “Banks and Other Financial Institutions Act” 2020 (“BOFIA 2020” or “ the New Act”) was signed into law by President Muhammadu Buhari on 13 November 2020 and repeals the extant BOFIA 1991 (as-amended in 1997,1998, 1999 and 2002). The BOFIA 2020 introduces and amends major provisions that govern the activities of banks, specialised banks and other financial institutions, reflecting the evolution of the Nigerian financial sector over the last three decades. The Act, among other things, seeks to strengthen regulatory oversight and increase investor confidence in the financial sector.
The BOFIA 2020 has six major new provisions. These new provisions include sections on the creation of a new banking sector resolution fund, the creation of a new tribunal for the enforcement and recovery of eligible loans and closure of banks during strikes, epidemic or pandemic. The other new provisions include sections on restrictions on operations of banking agents, cybersecurity and netting arrangements.
The Establishment of a Banking Sector Resolution Fund
Without prejudice to the Asset Management Corporation of Nigeria (AMCON) Act, the BOFIA 2020 establishes a banking sector resolution fund (“the Resolution Fund”), which will function like a bridge bank. The resolution fund will be floated by the CBN, the Nigeria Deposit Insurance Corporation (NDIC) and the banking industry. …
