The National Assembly recently summoned the Central Bank Governor for questioning regarding why he donated N100m to Kaduna Bomb Blast Victims and about N620b to distressed banks. Sanusi, replied that his decision was in line with the Central Bank Act 2007 Section 31 which gives the Banks powers to lend money and acquire shares. Here is what the section says “The may subscribe to hold and sell shares of any corporation or company or debentures thereof set up with the approval of or under the authority of the Federal Government for the purposes of promoting the development of money or capital markets in Nigeria or the stimulation of the financial or economic development so however that in such any case, the total value of the holding of shares as the case may be, debentures to which theis section applies shall not be at any time exceed ten times the aggregate of the Banks paid up capital and the general reserve fund of the bank”
So what is the Paid up capital of the CBN in 2009? According to the banks Annual Report for 2009 it had N5b in share capital and N71.8b in General Reserves totaling N86.8b. Ten times that is N768b which is more than the N637b lent to Banks that year. So in the light, Mr Sanusi is correct.
Donations
As part of economic development, the bank may also donate money to communities or organisations in need of aid. This covers the N100m donation and subsequent N25m donation in my opinion. In the past the bank has made donations without much noise so this may also be one of those issues that lend credence to sensationalization (which I cannot absolve myself from too). In 2010 and 2009 the bank spend about N1.4b and N209m on donations respectively which shows an acceptable trend.
Finally,
I rate this in positive territory and support the CBN’s claim that they did not break the law.
Legal!= RIGHT. Laws can be amended if they permitted wrong things by mistake.