Law-making is not an abstract exercise. Normally, a deficiency or a “mischief” is recognised to exist in the current law and a legislative intervention is crafted to address or remedy this deficiency or “mischief.”
A slew of very technical pieces of legislation with far-reaching ramifications in the banking sector are scheduled to be debated at today’s sitting of the National Assembly. These pieces of legislation significantly alter the existing fiscal infrastructure in the banking sector, they enlarge the functional responsibilities of the Central Bank generally, but more specifically in relation to other financial institutions, they provide additional grounds on which the licence under which financial institutions operate, can be revoked, they limit the recourses to which these financial institutions can resort if aggrieved by a decision of the Central Bank and they confer on the Central Bank, unusually wide, if not draconian powers to take over financial institutions. They also impose a host of additional fiscal and other responsibilities on financial institutions.
One must question what has occurred recently in the banking sector to precipitate such fundamental, multiple and wide-ranging statutory interventions. Is there something significant that the Government knows will happen but is not disclosing same to the public?
Significantly, it does not appear that the Minister of Finance or the Government for that matter, held any consultations with the banking sector or even the broader private sector groupings on these Bills.
Last Friday, I spoke to two managers of different commercial banks and they were totally unaware of these Bills. This lack of consultation is reprehensible. These Bills, when they become law, significantly alter the banking sector, the relationship between the Central and commercial banks and they will impose a multiplicity of additional responsibilities on these financial institutions. To discharge these functions and obligations, will require drastic changes in these institutions, including the training of staff or recruitment of new staff and certainly, will increase the operational costs of these institutions. These institutions will have no time to adjust and prepare for these various challenges. These new operational costs will be transferred eventually to depositors and customers of the bank. Yet, from all indications, the government has not seen it fit to engage this sector or anyone in any form of consultation.
This cannot be good and accountable governance.