CBN threatens license revocation for microfinance banks trading in FX
Microfinance banks operating beyond the scope of their license will have their license revoked, the Central Bank of Nigeria (CBN) has warned.
In a circular signed and released by Ibrahim Tukur, head of CBN’s financial and regulation department, on Thursday, the bank threatened to revoke the licences of microfinance banks carrying out foreign exchange transactions.
“The CBN will continue to monitor developments in the MFB sector and apply severe regulatory sanctions for breaches of extant regulations, including revoking the licence of non-compliant MFBs (in line with Section 19 of the Guidelines),” the circular read.
The apex bank stated that it had observed that some microfinance banks (MFBs) have begun dealing in activities it deemed “non-permissible”. These activities include wholesale banking and foreign exchange transactions.
The bank argued that those activities were done at a great risk to the financial system and the banks, and directly contravene the Revised Regulatory and Supervisory Guidelines for Microfinance Banks in Nigeria 2012.
“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,” the document said.
It further that “It has therefore become imperative to remind MFBs to strictly comply with the extant Revised Regulatory and Supervisory Guidelines for Microfinance Banks in Nigeria 2012 (the Guidelines).”
The apex bank asked that MFBs focus on providing financial services to retail consumers reiterating that they are “strictly prohibited from foreign exchange transactions”.
It added that micro credit and retail transactions are limited to N500,000 per transaction for Tier 2 Unit MFBs and N1,000,000 for other categories.
The Central Bank also added that small-scale credit facilities shall make up a minimum of 80 per cent of total loans portfolio for MFBs.
This development comes a month after the apex bank discontinued FX sales to Bureau De Change operators and directed banks to set up teller points in designated branches to sell the dollar and other foreign currencies to Nigerians.
More from Peoples Gazette
Economy
NGX moves 280.57 million shares worth N3.18 billion in bearish trading
Honeywell Flour was the most active stock, trading 57.49 million shares worth N185.76 million.
Heading 5
Two Americans become Ghanaian citizens
Ms Fletcher, 107, and Mr Ellis, 100, were survivors of the 1921 massacre of black people in Tulsa, a city in the U.S.
Education
UNIJOS laments killing of students, suspends activities indefinitely
The university management said since the 24-hour curfew in the state was relaxed, there have been intensified killings of its students.
World
Australia’s mining firm BHP sacks 48 workers for sexual harassment.
There have been allegations of two rapes, one attempted rape and three cases of forced kissing or groping.
Sport
Isaac Success joins Udinese from Watford
Success joins the Italian side after spending five years at Watford.
States
Buhari, Atiku exchange fist bump as president’s son weds in Kano
Yusuf Buhari, 27, a graduate of the University of Surrey in the United Kingdom, wedded Ms Zahra, 19, in Kano, on Friday.
