CBN Attacks All Nigerian Microfinance Banks, Threatens Sanctions
-
The Central Bank of Nigeria (CBN) has issued a warning to microfinance banks, warning them to stop operating beyond their license limit
-
The apex bank issued a circular on Thursday, stating that the banks have been operating beyond their permissible activities
-
MFBs have been advised to desist from foreign exchange and wholesale banking or risk sanction from Nigeria’s financial regulator
The Central Bank of Nigeria (CBN) has warned microfinance banks in the country to desist from offering services that exceed their limit.
In a circular titled “Cessation of non-permissible activities by MFBs”, which was released on Thursday, the Apex bank warned microfinance financial institutions against engaging in foreign exchange and wholesale banking transactions.
The statement revealed that Nigeria’s financial regulator had noted some MFBs engaging in activities that are not permitted.
A part of the statement reads:
“MFBs are strictly prohibited from foreign exchange transactions; MFBs are to primarily focus on providing financial services to retail and/or micro clients; Microcredit and retail transactions carried out by MFBs are limited to 500,000 per transaction for tier 2 unit MFBs and N1,000,000 for other categories; and Micro credit facilities shall constitute a minimum of 80 per cent of total loans portfolio for MFBs.”
According to the circular, Microfinance banks that are found to go against the regulations risk sanctions which can be as extreme as revoking of license.
The drastic decision from the CBN is likely to affect the operation of microfinance banks in the country, and their response to the decision is still unknown.
CBN’s latest regulation comes only a few days after it secured a court order to block the account of 6 Nigerian fintech companies.
Major companies such as Bamboo System Technologies, Chaka, and Trove Finance were affected by the order.
Follow Naija.fm on our social media handles Facebook, Instagram, and Twitter to keep up with trending news, breaking news, entertainment news, and hot gist.
