Banks and Other Financial Institutions Act 2020 PDF

# Banks and Other Financial Institutions Act, 2020 ## Act No. 5 An Act to repeal the Banks and Other Financial Institutions Act, Cap. B3, Laws of the Federation of Nigeria, 2004 and enact the Banks and Other Financial Institutions Act, 2020 to, among Other things, regulate and supervise banking an...

# Banks and Other Financial Institutions Act, 2020 ## Act No. 5 An Act to repeal the Banks and Other Financial Institutions Act, Cap. B3, Laws of the Federation of Nigeria, 2004 and enact the Banks and Other Financial Institutions Act, 2020 to, among Other things, regulate and supervise banking and business of Other financial institutions in Nigeria; and for related Matters. ## [12th day of November, 2020] Enacted by the National Assembly of the Federal Republic of Nigeria- ## Chapter A - Banks ### Part I - Licensing and operation of Banks 1. The Central Bank of Nigeria (in this Act referred to as "the Bank") shall have all the functions and powers conferred and duties imposed on it by this Act. 2. The Bank may authorise or instruct any officer or employee of the Bank To perform any of its functions, exercise any Of its powers or discharge any of its duties under this Act. 3. The Bank may, either generally or in any particular case, appoint any person who is not an officer or employee of the Bank to render such assistance as it may specify in the exercise of its powers, the performance of its functions or the discharge of its duties under this Act, or the Central Bank of Nigeria Act, or to exercise, perform or discharge the functions and duties on behalf of, and in the name of, the Bank. 4. No person shall carry on any *banking business* in Nigeria except it is a *company* duly incorporated in Nigeria and holds a valid *banking licence* issued under this Act. 5. Any person who carries on *banking business* in Nigeria without a valid licence under this Act, commits an offence and is liable on conviction to- - imprisonment for a term of not less than five years; - a fine of not less than N50.000.000; - two times the cumulative deposits or Other amount collected; or - both imprisonment and fine. 6. For the purpose of subsection (2), “any person” includes a body corporate, its promoters, directors, managers, or officers that are in any way connected with superintending, directing or managing the affairs of the company. 7. For the purpose of refunding the deposits to account holders in subsection (2), the Bank may direct that the money be deposited with a licenced bank appointed for that purpose who shall undertake the refund and report thereon to the Bank. 8. For the purposes of this Act, a person is deemed to be receiving money as deposits and thus, conducting banking business if the person- - accepts deposits from the general public as a feature of its business or if the person solicits for deposits orally, electronically or through any form of advertisement or otherwise by any other means; or - receives money as deposits which is limited to fixed amounts, or for which certificates or other instruments are issued in respect of such amounts providing for the repayment to the *holder*, either conditionally or unconditionally of the amount of the deposits at specified or unspecified dates, or for the payment of interest, dividend, profit or fees on the amounts deposited at specified intervals or otherwise, or that such certificates are transferable : Provided that the receiving of money against any issue of shares, debentures or non-interest bearing instruments offered to the public in accordance with any enactment in force within the Federation is not deemed to constitute receiving money as deposits for the purpose of this Act. 9. Any person desiring to undertake banking business in Nigeria shall apply in writing to the Governor for the grant of a *licence* and shall accompany the application with- - a feasibility report for the *proposed bank*, including financial projections for at least five years; - a draft copy of the *memorandum and articles of association* of the proposed bank ; - a list of the shareholders, directors and principal officers of the proposed bank and their particulars; - where the application is in relation to *non-interest banking*, a list of experts on non-interest banking or finance that will serve as its advisory committee of experts; - the prescribed *application fee*; and - such Other information, documents and reports as the Bank may specify. 10. After the applicant company has provided all such information, documents and reports as the Bank may require under subsection (1), the shareholders of the proposed bank shall deposit with the Bank a sum equal to the minimum paid-up share capital that may be applicable under section 9 of this Act upon the payment of the sum referred to under subsection (2), the Governor may, with the *approval* of the *Board*, issue a *licence* with or without conditions or refuse to issue a *licence*, and the Governor need not give any reason for such refusal. 11. Where a *licence* is granted, the Bank shall duly **notify** the applicant and upon being notified, the applicant shall pay the prescribed *licence fee* within the time stipulated by the Bank. 12. Any foreign bank or other entity which does not have a physical presence in its country of incorporation, or which is not licensed in its country of incorporation and which is not affiliated to any financial services group that is subject to effective consolidated supervision, shall not be permitted to operate in Nigeria, and no Nigerian bank shall establish or continue any relationship with such bank or Other entity. 13. Any bank that contravenes subsection (5) is liable to a penalty of not less than N20,000,000 and to an additional penalty of N500,000 for each day the contravention continues. 14. The bank may invest any sum deposited with it pursuant to section 3 (2) of this Act in treasury bills or such other securities or where the sum is deposited in pursuance of an application for a non-interest bank in non-interest bearing securities or similar non-interest banking compliant product or investment, until such a time as the Governor shall decide whether or not to grant a licence. 15. Where the sum deposited is invested in pursuance of subsection (1) and a licence is not granted, the Bank shall repay the sum deposited to the- - applicant together with the *investment income* after deducting administrative expenses and tax on the income; or - licenced institution together with the investment income and the investment income shall be treated as income of the licenced institution. 16. The Bank may vary or revoke any condition subject to which a licence was granted or may impose fresh or additional conditions to the grant of licence. 17. Where the grant of a *licence* is subject to conditions, the bank shall comply with those conditions to the satisfaction of the Bank within such period as the Bank may deem appropriate in the circumstances: 18. Any bank which fails to comply with any of the conditions of its licence commits an offence and is liable on conviction to- - a penalty of not less than N20,000,000; and - an additional penalty of N500,000 for each day during which the condition is not complied with. 19. Where the Governor proposes to vary, revoke or impose fresh or additional conditions on a licence, the Governor shall, before exercising such power, give notice of his intention to the bank concerned and give the bank an opportunity to make representation to him thereon. 20. Any bank which fails to comply with any fresh or additional condition imposed in relation to its licence is liable to- - a penalty of not less than N5,000,000; and - an additional penalty of N100,000 for each day during which the fresh or additional condition is not complied with. 21. Any person who, being a director, manager or officer of a bank fails to take reasonable steps to secure compliance with any of the conditions of the licence of the bank, commits an offence and is liable on conviction to imprisonment for a term of not less than three years or a fine of not less than N2,000,000 or both. 22. No bank shall open or close any branch office, cash centre or representative office anywhere within or outside Nigeria except with the prior written consent of the Bank. 23. Any bank intending to close any of its branches or subsidiaries outside Nigeria shall give notice in writing to the Governor of its intention, at least six months before the date of the intended closure or within such shorter period as the Governor may, in any particular case, allow. 24. The bank may direct any bank to divest from any of its subsidiaries where the bank determines that the continued investment of a bank imperils the financial health of the bank, or where the bank determines that the oversight by the bank, or supervision by the host regulator over such subsidiary is not adequate relative to the risks the subsidiary presents, or if the bank cannot gain access to the information required to assess the risk posed to a bank by such subsidiary on a continuous basis. 25. Any bank which contravenes the provisions of subsections (1) or (2) or Which fails to comply with a directive of the Bank made under subsection (3) is liable to a penalty of not less than 5,000,000 and an additional penalty of N100,000 for each day during which the contravention continues. 26. Without prejudice to the provisions of subsection (4), the Governor may order the- - closure of any branch office, cash centre or representative office or any Other banking outlet opened without the prior written consent of the Governor in contravention of subsection (1) or (2); or - re-opening of any branch office, cash centre or representative office or any Other banking outlet closed without the prior written consent of the Governor in contravention of subsection (1). 27. Except with the prior written *consent* of the *Governor*, no bank shall enter into an agreement or arrangement- - which results in- - a change in the *control* of the bank, or - the transfer of a significant shareholding in the bank ; - for the sale, disposal or transfer of the Whole or any part of the business of the bank ; - for the amalgamation or *merger* of the bank with any other person ; - for the restructuring, reconstruction or *re-organisation* of the bank; or - to transfer the *whole* or any part of the business of the bank to any agent. 28. Where a bank proposes to enter into any agreement or arrangement under subsection (1), the Bank may, on the application of any of the banks to be affected, order separate meetings of the banks to be summoned in such manner as the Bank may direct. 29. Any transaction in contravention of subsection (1) is void and any transfer of interest thereunder shall be ineffectual except where such transaction is subsequently ratified in writing by the Bank. 30. The bank may approve an agreement or arrangement covered by subsection (1) if the bank is satisfied that- - such agreement or arrangement is not likely to cause a *restraint* of competition, or tend to create a monopoly in the *banking industry*; - the significant shareholders or directors of the bank that results from the agreement or arrangement are not disqualified under section 47 of this Act; - the agreement or arrangement is consistent with public interest; and - the bank that results from the agreement or arrangement meets the capital requirements prescribed under sections 9 and 13 of this Act. 31. Upon the grant of a new banking licence by the bank to a bank which results from the agreement or arrangement in subsection (1), all the assets and liabilities of the banks that are parties to the agreement or arrangement shall, by virtue of the grant of the new banking licence, be transferred to and become the assets and liabilities of the new bank. 32. The provisions of this Act apply notwithstanding the provisions of the Federal Competition and Consumer Protection Act. 33. Any person who contravenes subsection (1), commits an offence and is liable on conviction to a penalty of not less than N20,000,000 and in the case of a continuing breach, to an additional penalty of N500,000 for each day during which the contravention continues. 34. Except with the Prior *approval* of the Bank, a foreign bank shall not operate branch offices or representative offices in Nigeria. 35. Without prejudice to the provisions of Nigeria Processing Zones Authority Act or any other related enactment or law, the Bank may, subject to such conditions as it may impose, grant to any bank registered in Nigeria or a foreign bank licensed to undertake domestic or off-shore *banking business* within a designated free trade or special economic zone in Nigeria. 36. A bank or other person shall not undertake *offshore banking business* from Nigeria except with the prior approval of the Bank. 37. For the purpose of subsections (2) and (3), the term, "offshore banking", means The provision from within Nigeria of cross-border intermediation of funds and the provision of banking and financial services to non-residents of Nigeria, other than non-residents that are Nigerian citizens. 38. Subject to the provisions of subsection (1), nothing in the provisions of the *Nigerian Investment Promotion Commission Act* or any other law or enactment, shall be construed as authorising any person, whether as a citizen of *Nigeria* or a non-*Nigerian*, to carry on any *banking business* in Nigeria without a valid banking licence issued by the *Bank* under this Act. 39. Any person who contravenes subsection (1) or (3), commits an offence and is liable on conviction to a penalty of not less than 10,000,000, and every director of any such foreign bank or banks is liable to imprisonment for a term of not less than three years or a fine of not less than N2,000,000 or both. 40. The Bank shall determine the minimum paid-up share capital requirement of each category of banks licensed under This Act which shall be complied with by each bank within the time prescribed by the Bank. 41. Failure to comply with the provisions of subsection (1) within such period as may be determined by the Bank, is a ground for the revocation of any licence issued under This Act or any Other Act repealed by it. 42. Notwithstanding the provisions of the Companies and Allied Matters Act or any agreement or contract, The voting rights of every shareholder in a bank shall be proportional to individual contributions To the paid-up share capital of the bank. 43. Notwithstanding anything contained in any law, contract or instrument, a suit or Other proceedings shall not be maintained against any person registered as the holder of a share in a bank on the ground That the title to the said share is vested in a person Other than the registered holder: Provided that nothing in this section shall bar a suit or Other proceedings on behalf of a minor or person suffering from any mental illness on the ground that the registered holder holds the share on behalf of the minor or person suffering from mental illness. 44. Notwithstanding the provisions of this Act or any other law, the Governor may, with the approval of the Board and by notice published in the Federal Government Gazette, or print and electronic media, revoke any licence granted under this Act if a bank- - ceases to carry on in Nigeria the type of banking business for which the licence was issued for any continuous period of six months or any period aggregating six months during a continuous period of 12 months; - goes into *liquidation* or is *wound up* or otherwise dissolved; - fails to fulfil or comply with any condition subject to which the licence was granted; - has insufficient assets to meet its liabilities; - conducts its business in an unsound manner or its directors engage in unsafe practices; - is involved in a situation, circumstance, action or inaction Which constitutes a threat to *financiai stability*; - fails to comply with any obligation imposed upon it by or under this Act, or the Central Bank of Nigeria Act or any Other rule, regulation, guideline or directive made hereunder; - is, in the Opinion of the Bank critically undercapitalised with a capital adequacy ratio below the prudential minimum or SUCH Other ratio as the Bank may prescribe; - fails to commence *banking operations* within 12 months following the grant of a licence; or - fails to comply with the provisions of section 9 or 13 of this Act. 45. Where the licence of a bank has been revoked under this Act and the Governor is satisfied that it is in the public interest to do so, the Governor may, subject to the approval of the Board and without waiting for any period prescribed for doing anything under This Act or any law to lapse, appoint the Nigeria Deposit Insurance Corporation (in this Act referred to as "the Corporation) as a liquidator of the affected bank and the Corporation shall have the powers conferred on a liquidator By or under the Companies and Allied Matters Act and shall be deemed to have been appointed a liquidator By the Federal High Court for the purpose of this Act. 46. Notwithstanding the provisions of this Act, the Companies and Allied Matters Act or any other law, where the Bank has revoked any licence granted under this Act and the Bank has appointed the Corporation as a liquidator pursuant to subsection (2), the corporation shall immediately proceed with the liquidation of the bank whose licence has been revoked and the payment of assured deposit liabilities pursuant to the *Nigeria Deposit Insurance Corporation Act*. 47. An action to challenge the revocation of the licence of a bank, specialised bank or Other financial institution on any ground shall only be instituted in the Federal High Court, and such action and any appeal arising therefrom heard and determined on an expedited and accelerated basis. 48. No action in respect of the revocation of the licence of a bank, specialised bank or Other financial institution shall be filed or maintained unless such action is filed within 30 days from the date of the revocation. 49. Notwithstanding the provisions of this Act or any other enactment, no restorative or like order shall be granted against the Bank or *Governor* in any action, suit or proceeding in relation to the revocation of a licence by the Bank under this Act, and the remedy of any claimant or applicant against the Bank or Governor in any such action, suit Or proceeding is limited to monetary compensation not exceeding the equivalent of the value of the *paid-up capital* of the bank at the time of the revocation of its licence. 50. A bank shall maintain, at all times, capital funds unimpaired by losses, in such ratio to all or any asset or to all or any liability or to both such assets and liabilities of the bank and all its offices in and outside *Nigeria* as may be specified by the Bank. 51. Notwithstanding subsection (1), the bank may prescribe a higher or lower capital adequacy ratio with respect to any category of banks. 52. The bank may require a bank to maintain additional capital as the Bank considers appropriate in respect of specific risks. 53. The bank may require a bank that has- - a *holding company*; - a *subsidiary*; or - a *holding company* and a *subsidiary*, To calculate and maintain a minimum capital adequacy ratio on a consolidated basis. 54. Any bank which fails to Observe any such specified ratios may be prohibited by the Bank from- - advertising for or accepting new deposits; - granting credit or finance and making investments; - paying cash dividends to shareholders; - paying bonus to its directors, other than the approved emoluments and benefits; or - engaging in Other activities as the Bank may specify. 55. Notwithstanding the provisions of subsection (5), the Bank shall have power to impose such additional holding actions, prohibitions and conditions as it may deem fit for failure to comply with the specified capital adequacy ratio. 56. The bank may be required to draw up within a specified time, a capital *reconstitution plan* acceptable to the Bank. 57. Every bank shall maintain with the Bank, cash reserves, and special deposits or any non-interest *banking instruments* as may be approved by the Bank and hold specified liquid assets or other *securities*, as the case may be, not less in amount than as may, be prescribed by the Bank by virtue of section 45 of the Central Bank of Nigeria Act. 58. Where both assets and liabilities are due from and to other banks, they shall be offset accordingly, and any surplus of assets or liabilities shall be included or deducted, as the case may be, in computing specified liquid assets. 59. In the case of the *long-term advances* to a bank or by an overseas branch or office of a bank, the advances may, with the approval of the *Bank*, be excluded from the demand liabilities of the bank. 60. Every bank shall- - furnish within the specified time, any information required by the Bank to satisfy the *Bank* That the bank is observing the requirements Of subsection (1); - not allow its holding of cash reserves, specified liquid assets, special deposits and securities to be less Than the amount which may be prescribed by the Bank; and - not, during the period of any deficiency, grant Or permit increases in advances, loans or credit facilities To any person without the prior approval in writing of the Bank. 61. Any bank which fails to comply with any of the provisions of subsection (4), is liable on conviction to a penalty of not less than N5.000,000 and an additional penalty of N100,000 for each day during which the contravention continues. 62. For the purpose of this section, specified liquid assets, provided they are freely transferable and free from any lien or charge of any kind, shall, without prejudice to the provisions of section 45 of the *Central Bank of Nigeria Act*, consist of all or any- - currency notes and coins which are legal tender in Nigeria; - balances at t he Bank; - net balances at any *licenced bank* (excluding uncleared effects) and money at call in Nigeria : - treasury bills, treasury certificates and any non-interest banking instrument as may be approved by the Bank issued by the Federal Government; - inter-bank placement, inland bills of exchange and promissory notes re-discountable at the Bank; - other securities issued by the Federal Government with such dates of *maturity* as may be approved by the Bank; - negotiable certificates of deposit approved by the Bank; and - such Other negotiable instruments as may be approved by the Bank for the purpose of this section. ### Part II - Duties of Banks 63. Every bank shall maintain a statutory *reserve fund* and shall, out of its net profits for each year after due provision has been made for taxation and before any dividend is declared, where the amount of the reserve fund is- - less than the paid-up share capital, transfer to the reserve fund A sum not less than 30% of the net profits; or - equal to or in excess of the *paid-up share capital*, transfer to the reserve fund a sum not less than 15% of the net profit : Provided that no transfer under this subsection shall be made until all identifiable losses and accumulated losses have been made good. 64. Any bank Which fails to comply with the provisions of subsection (1) commits an offence and is liable on conviction to a fine of not less than N2,000,000. 65. Notwithstanding paragraphs (a) and (b) of subsection (1), the Bank may, specify a different proportion of the net profits of each year, being either lesser or greater than the proportion specified in paragraphs (a) and (b) of subsection (1) to be transferred to the reserve fund of a bank for the purpose of ensuring that the amount of the reserve fund of such bank is sufficient for the purpose of its business and adequate in relation to its liabilities. 66. A bank shall not pay *dividend* on its *shares* until- - all its preliminary expenses, *organisational expenses*, shares selling commission. brokerage, amount of losses incurred, and Other capitalised expenses not represented by tangible assets have been completely written off; - adequate provisions have been made to the satisfaction of the Bank, for actual and *contingent losses* on assets, *liabilities*, off balance sheet commitments and such unearned incomes as are derivable therefrom; - it has complied with any *capital ratio requirement* as specified by the Bank pursuant to section 13 of this Act; and - it has satisfied any Other *corporate governance* and prudential requirements that may be stipulated by the Bank. 67. Any director, manager or officer who fails to comply with the requirements of this section of This Act commits an offence and is liable on conviction to a term Of imprisonment of not less than three years or to a fine of not less than N2,000,000 or to both. 68. A manager or any other officer of a bank shall not- - in any manner whatsoever, Whether directly or Indirectly, have personal interest in any advance, loan Or *credit facility*, and if the manager or officer has any such personal interest, such manager or officer shall *declare* the nature of such interest to the bank; or - grant any advance, loan or credit facility to any person, unless it is authorised in accordance With the rules and regulations of the bank and in line with the regulations on *collateralisation* issued by the Bank. 69. Any manager or officer who contravenes or fails to comply with any of the provisions of subsection (1), commits an offence and is liable on conviction to imprisonment for a term of not less than three years or a fine of not less than N5,000,000 or both, and any gain or *benefit* accruing to any person convicted under this section, by reason of such contravention, is forfeited to and vested in the bank. 70. A director of a bank who is in any way, whether directly or indirectly, interested in the grant of an advance, loan or credit facility by the bank, shall declare the nature of such interest before the meeting of the board of directors of the bank, at which the request for the advance, loan or credit facility is first taken into consideration. 71. Where the director becomes interested in any *advance*, loan or credit facility after it is granted, the declaration shall be made to the board of directors immediately. 72. For the purpose of this section, a general notice given to the board of directors of a bank by a director to the effect That such director is a *member* of a company or firm seeking an advance, loan or credit facility from the bank shall be regarded as a declaration of his interest in the grant of the advance, loan or credit facility which may, after the date of the notice, be granted to that Company or firm, and is deemed to be a sufficient declaration of interest in relation to any such advance, loan or credit facility so *granted*: Provided that the notice shall not have effect unless it is in writing and given at a meeting of the board of directors of the bank which shall be required to do all things reasonably necessary to ensure that it is brought up and read at the next meeting of the board of directors of the bank after it is so given. 73. A director of a bank who is in any way, whether directly or indirectly, interested in the grant of an advance, loan or credit facility with a bank other than the bank in which such *person* is a *director*, shall declare the nature of such interest in writing to the Bank prior to the grant of the advance, loan or credit facility by that other bank and in a case where the director becomes interested in any advance, loan or credit facility from another bank after it is *granted*, the declaration shall be made to the *Bank* immediately. 74. Subsections (3) and (6) do not apply in any case- - where the interest of the director consists only of being a person holding less than 5% of the shares of the company which is seeking an advance, loan or credit facility from the bank, or such percentage as the Bank may prescribe; or - if the interest of the director may properly be regarded by the Bank as immaterial. 75. For the purpose of subsection (5), a general notice given to the board of directors of a bank by a director is deemed to be a sufficient declaration of interest in relation to any advance, loan or credit facility, if- - the notice specifies the nature and extent of interest in the company or firm; - the interest is not different in nature from or greater in extent than the nature and extent specified in the notice at the time any advance, loan Or credit facility is made; and - the notice is given prior to the meeting of the board of directors of the bank. 76. Every director of a bank who holds any Office or possesses any property, whether directly or indirectly, or who by reason of holding such office Or possessing such property, or otherwise has duties or interests which might conflict with such director's duties or interests as a director of a bank, shall declare, before a meeting of the board of directors of the bank, the fact and the nature, character and extent of the duties or interests. 77. The declaration referred to in subsection (9) is required to be made at the first meeting of the board of directors of the bank held- - after such person becomes a director of the bank; or - if already a director, after such person takes office or came into possession of the property. 78. The secretary of the board of the bank shall- - cause to be brought up and read any declaration made under subsection (3), (8) or (9) at the next meeting of the board of directors of the bank after it is made; and - record any declaration made under this section in the minutes of the meeting at which it was made or at the meeting at which it was brought up and read. 79. A director who contravenes subsection (3), (6) or (9), commits an offence and is liable on conviction to a fine of not less than N5,000,000 or imprisonment for a term of three years or both. 80. No bank shall- - employ or continue the employment of any person who is, or at any time has been, adjudged bankrupt or has suspended payment to or Has compounded with his creditors or Who is or has been convicted by a court For an offence involving fraud, or dishonesty Or professional misconduct; or - be managed by a management agent except as may be approved by the Bank. 81. Except with the approval of the Bank, no bank shall have, as a director, any person who is a director of- - any other bank; or - any company or entity which has significant influence on the bank : Provided that in the case of a financial holding company, the *aggregate* number of directors from the subsidiaries and associates shall not *exceed* 30% of the members of the board of directors of the financial holding company, and the number of directors of the financial holding company in the board of a subsidiary or associate shall not *exceed* 30% of the members of the board of such subsidiary or associate. 82. For purposes of subsection (2) (b), “significant influence” means direct or indirect ownership of 5% or more of the voting rights in the bank Or controlling influence in the decision-making process of the bank. 83. A bank shall not be managed by a *person* who is- - a director of any other company not being a subsidiary of the bank; or - engaged in any other *business* or vocation whether remunerated or not except such personal or charitable causes as may be determined by the Bank and which do not conflict with or detract from their full-time duties. 84. Every director of a bank Shall sign and adhere to a *code of conduct* in such form or manner as the bank may prescribe. 85. The chief executive of a bank shall cause all the officers of the bank to sign and adhere to a code of conduct as may be approved by the board of *directors*. 86. A bank, specialised bank or other Financial institution shall not, without the prior approval in writing of the bank, grant- - to any person any advance, loan or credit facility or give any financial guarantee or incur any other liability on behalf of any person so that the total value of the advance, loan, credit facility, financial guarantee or any other liability in respect of the person is at Any time more than 20% of the shareholders' funds *unimpaired* by losses in the case of a *commercial bank*, and 50% of the *shareholders* funds unimpaired by losses in the case of a *merchant* bank, and in the case of specialised banks and other financial institutions, such percentage as the bank may determine: Provided that bank may prescribe- - such Other percentages as it may determine, and - single obligor limits specific to non-interest *banks* having regard to their peculiarities; - any advance, loan or *credit facility* against the security of its own shares; or - any unsecured advance, loan or credit facility except it is in line with the regulation on *collateralisation* as may be issued by the bank. 87. For the purpose of subsection (1) (a), all advances, loans or credit facilities extended to any person shall be aggregated and shall include all advances, loans or credit facilities extended to any *subsidiary* or affiliate of a body corporate or such other *related party* as the Bank may, by regulation, prescribe: Provided that subsection (1) (a) does not apply to transactions between banks or between branches of a *bank* or to the *purchase* of clean or documentary bills of exchange, telegraphic transfers or documents of title to goods the holder of Which is entitled to payment for exports from Nigeria or to advance made against such *bills*, transfers or documents. 88. A bank shall not, without the prior approval in writing of the Bank - permit to be outstanding, unsecured advances, loans or unsecured credit facilities of an *aggregate* amount in excess of N1,000,000 or Such amount as may be prescribed by the bank to- - its directors, significant shareholders or any of them Whether such advances, loans or credit Facilities are obtained by its directors or significant shareholders jointly or severally, - any firm, *partnership* or private company in which it, or any one or more of its *directors* or significant shareholders, is interested as director, *partner*, manager or agent Or any individual firm, partnership or private company of which any of its *directors* or significant shareholders is a guarantor, or - a public company or private company in which it, or any one or more of its directors or significant shareholders jointly or severally Whether directly or indirectly, maintains shareholding of not less than 5% or such percentage as may be specified by the bank. - permit to be outstanding to its officers and employees, unsecured advances, loans or unsecured credit facilities which, in the aggregate for any one officer or employee, is in excess of one year's *emolument* to such Officer or employee, or such amount as may be specified by the bank; and - remit, either in whole or in part, the debts owed to it by any of its directors, or past directors or *significant shareholders*. 89. Any loan, advance, or credit facility granted to a director, shall continue to be treated and continue to be reported as *insider related* until It is fully liquidated irrespective of whether such director remains on the board of the bank or not. 90. A bank shall- - not lend more than 5% of its paid-up capital to any of its directors or significant shareholders provided that the aggregate of the bank's *exposure* to all its directors and significant shareholders does not exceed 10% of its paid-up share capital or such percentage as the bank may prescribe: - in extending credit to any of its directors or *significant shareholders*, ensure that- - it does so on the same terms and conditions as those prevailing at the time, for comparable transactions by the bank with persons who are not directors or shareholders of the bank, - the grant of the credit does not involve more than the normal risk of repayment or present other unfavourable features, - it follows credit appraisal procedures that are not less stringent than those applicable to comparable transactions by the bank with persons who are not *directors* or shareholders of the bank: Provided that nothing in this subsection shall prohibit any extension of credit made pursuant to a benefit Or compensation programme that is widely available to employees of the *bank*, and - it does not give preference to any director or shareholder. 91. In this section- - "director" includes director's *wife*, husband, father, mother, brother, sister, son, daughter, their spouses, a company in which the director is also a *director* or shareholder or holds at least 5% shareholding of the company, a company whose *board*, or managing director, is accustomed to act in accordance with the advice, directions Or instructions of the director and all Other related parties as may be determined by the Bank; - "significant shareholder" means a person holding not less than 5% of the shares of the bank or such Other percentage as may be prescribed by the bank and this shall include the shareholding of a wife, husband, father, mother, brother, sister, son, daughter, their spouses and all other related parties as may be determined by the Bank ;