GRID OF SANCTIONS FOR CBN's PACKAGE FOR ELECTRICITY.

The Central Bank of Nigeria (CBN) has issued its  grid of sanctions to be applied on deposit money banks that breach the agreement behind it's recent package of soft loans to help electricity distribution companies (DISCOs) find their feet.

Under the package. DISCOs are expected to access billions in funds to pump into electricity distribution as part of efforts to help the recently privatised sector deliver the goods.

They will access the facility through banks and re-refinancers who will ensure that repayment is at when due and that good transaction account records were kept, updated and made available when required.

To ensure the banks play their own part flawlessly, the list of sanctions in the case of breach of about 11 clear ground rules were released early this month.

The sanctions range from warning letter demanding for compliance within two days for first infractions in many cases; to N500,000 daily penalty for second infraction and termination of participation mandate there after.

These apply in times collection banks and principal collection banks fail to provide statement of transactions after each month end; or fail to supply such statements within 5 days of any formal request;  and non compliance with operational process document issued by the CBN.

They will also apply if involved banks do not provide the right view or any such information relating to transactions in real time and when DISCO revenues are paid directly into any account other than the feeder account stipulated in the agreement for the facility.

Stiffer penalties are provided for closure of transaction account without written consent of the refinancer ; opening any other account for DISCOs also without refinancer consent and allowing any withdrawal from the account when balance therein is not enough for scheduled repayment.

The two instances to do with lack of formal consent attract N2m penalty per account involved and in the case of opened account, it will be closed within 24 hours or be further sanctioned with N2m each day it remains open.

In the case of withdrawal while funds are inadequate for repayment schedule, the penalty is N1m.

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