The Central Bank of Nigeria (CBN) will contribute N50bn to the Sinking Fund of the Assets Management Corporation (AMCON), Chairman of the Federal House of Representatives Committee on Banking and Currency, Hon. Jones Onyereri has revealed.
Onyereri, who was speaking on Monday at a one-day public hearing on a bill to amend the AMCON Act 2010 organised by the committee in Abuja, said commercial banks in the country would be mandated to contribute an amount equivalent to 50 basis points of their total assets to the fund.
“The key component of the amendment bill relates to setting up of a Sinking Fund or Resolution Cost Fund,” he said. “It basically obligates a bank to contribute annually an amount equivalent to 50 basis points of its total assets to the fund and CBN is to contribute N50bn to the fund.”
Onyeleri explained that the essence of the amendment is to further strengthen AMCON, as the bill would obliterate contradictions concerning purchase agreements between AMCON and financial institutions. He added that the bill would codify the obligations of both CBN and the banks and give the force of law to previous agreements between parties. He also assured that his committee would continue collaborating with regulatory authorities and banks with a view to reducing high interest rates in the country.
Declaring the hearing open earlier, Speaker of the House of Representatives, Aminu Tambuwal — who was represented by Deputy Minority Whip, Hon. Garba Datti (APC, Kaduna) — reiterated that AMCON was created to protect the public from shocks in the banking system.
“It is the duty of the House to protect the people from the major brunt of financial institutions,” he said.
“This public hearing is, therefore, part of a carefully laid-down strategy by the 7th Assembly to ensure that the nation’s financial sector is given the needed impetus to function properly.”
Also speaking, Managing Director of AMCON, Mr Mustapha Chikeobi expressed support for the bill, agreeing that the amendment would strengthen the corporation.
The fund is a safety net for AMCON to meet its obligations arising from the debt securities it has issued, while also insulating the tax payer from obligations occasioned by banks’ financial mismanagement.
