The Central Bank of Nigeria has threatened to sanction
microfinance banks going beyond the mandate of their operating licence to
engage in foreign exchange transactions.
The regulator said some microfinance banks have engaged in
wholesale banking, foreign exchange transactions and others.
This is coming after CBN in July stopped supplying Bureaux
De Change operators forex saying they are “agents that facilitate graft and corruption
in the country”. The CBN now supplies forex to commercial banks for sales to
individuals and businesses.
The apex bank in a circular to all the MFBs Thursday, signed
by an official at the Financial Policy and Regulatory Department, Ibrahim
Tukur, said certain operations by microfinance banks pose a huge risk to the
stability of the financial system.
“Given the comparatively low capitalization of MFBs, dealing
in wholesale and or foreign exchange transactions are a significant risk with
dire consequences for financial stability,” it said.
“It has therefore become imperative to remind all MFBs to
strictly comply with the extant revised regulatory and supervisory guidelines
for microfinance banks in Nigeria 2012.”
The bank threatened to revoke the licence of any MFBs that
fails to comply.
The circular stated that the MFBs are prohibited from
foreign exchange transactions and must primarily focus on providing financial
services to retail and/or micro- clients .
The apex also stated that micro-credit and retail
transactions carried out by MFBs were limited to N500,000 per transaction for
Tier 2 Unit MFB and N1 million for other categories.
According to the circular, the micro-credit facilities
should constitute a minimum of 80 per cent of total loans for MFBs.
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