Business
By Benprince Ezeh
THE Central Bank of Nigeria, CBN has warned Microfinance Banks, MFBs, to desist from foreign exchange and whole sale banking transactions.
The banks are also primarily to focus on providing financial services to retail and/or micro- clients, according to the CBN circular which was sighted by Realnews.
The circular to all MFBs dated August 19, and signed by Ibrahim S. Tukur, CBN’s financial and regulation department, observed that the activities of MFBs have gone beyond the remit of their operating licenses by engaging in non-permissible activities, especially wholesale banking, foreign exchange transactions and others.
The circular stated that “Given the comparatively low capitalization of MFBs dealing in wholesale and/or foreign exchange transactions are a significant risk with dire consequences for financial system stability, it has therefore become imperative to remind all MFBs to strictly comply with the extant Revised Regulatory and Supervisory Guidelines for MFBs in Nigeria 2012.”
Also, it said that “MFBs are strictly prohibited from foreign exchange transactions and are to primarily focus on providing financial services to retail and/or micro- clients.”
According to CBN, microcredit and retail transactions carried out by MFBs are limited to N500, 000 per transaction for Tier 2 Unit MFBs and N 1,000,000 for other categories.
“Microcredit facilities shall constitute a minimum of 80 percent of total loans portfolio for
MFBs”, the circular stated.
CBN said that it “will continue to monitor developments in the MFB sector and apply severe regulatory sanctions for breaches of extant regulations, including revoking the license of non-compliant MFBs in line with Section 19 of the guidelines.”
– Aug. 20, 2021 @ 17:20 GMT | C.E
Tags: Central Bank of Nigeria
