Ironically, the special exception for ILCs was enacted in 1987 as part of a broader legislative package designed to close an earlier loophole – the so-called nonbank bank loophole – that increasingly was being exploited by large commercial and financial firms to evade the nonbanking restrictions and consolidated supervisory requirements of the BHC Act.
To address the observed challenges, the CBN reviewed the UB Model with a view to directing banks to focus on their core banking business only.