The Central Bank of Nigeria (CBN) has pegged the Microfinance Banks (MfBs) loan limit per transaction at one million Naira (N1 million).
The CBN Governor, Godwin Emefiele announced the development, through directive in a Circular given to all Microfinance Bank titled: “Cessation of non-permissible activities by MfBs”.
The Microfinance Banks operators were also prohibited from engaging in transactions involving foreign currencies.
The CBN boss, further directed the Microfinance Banks to only focus on providing financial services to retail and/or micro clients, microcredit and retail transactions not exceeding N500,000 per transaction for tier 2 unit MFBs and N1 million for other categories.
Also, the apex bank directed micro credit facilities to constitute a minimum of 80% of total loans portfolio for MFBs.
Further more, CBN warned MfBs to desist from offering non-permissible activities, especially foreign exchange and wholesale banking transactions. CBN boss said he observed that some Microfinance Banks are engaging in non-permissible activities which pose risk to the financial system.
The Circular reads;
“The Central Bank of Nigeria (CBN) has observed the activities of some MFBs that have gone beyond the remit of their operating licenses by engaging in non-permissible activities, especially wholesale banking, foreign exchange transactions and others.
“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 thus, therefore, become imperative to remind all MFBs to strictly comply with the extant Revised Regulatory and Supervisory Guidelines for MFBs in Nigeria 2012 (the guidelines)”.
The circular was signed by the Director of Financial Policy and Regulation Department, Ibrahim Tukur.
Source: Nyscinfo