CBN toughens sanctions in draft guidelines for MFBs
The Central Bank of Nigeria has issued the revised supervisory and regulatory guidelines for micro finance banks in Nigeria to support the development and sustainability of the sector.
In a circular on Wednesday, it stated that, “The need to reposition and strengthen MFB towards improved performance had become apparent as revealed from the report of a recent review of the subsector.
“Accordingly, the 2012 guidelines have been reviewed to strengthen and complement other on-going reform in the MFB sector. An exposure draft of the review guidelines is hereby issued for comments and observations.”
The CBN specified that engaging in activities outside the approved business would attract a fine of N500,000 and forfeiture of the estimated profit from the engagement.
It stated that failure to obtain the CBN approval before going into any form of restructuring or reorganisation would attract a fine of N500,000 regardless of the category of the MFB.
The draft, however, maintained the required capital for the MFBs to operate.
In a circular in March 2019, The CBN had stated that the Tier 2 unit microfinance banks must have a minimum capital of N50m, while Tier 1 would maintain the N200m minimum capital introduced for unit microfinance banks in October 2018.
It stated that Tier 1 unit microfinance banks must meet a N100m capital threshold by April 2020 and N200m by April 2021.
Tier 2 unit microfinance banks, it added, must meet a N35m capital threshold by April 2020 and N50m by April 2021.
The CBN stated that state microfinance banks must increase their capital to N500m by April 2020 and N1bn by April 2021.
A national microfinance bank must hold a capital of N3.5bn by April 2020 and N5bn by April 2021, it added.
Before the apex bank commenced the recapitalisation of the microfinance institutions in 2018, the minimum capital base for national microfinance banks was N2bn, state microfinance banks was N100m, while the unit microfinance banks had a minimum capital requirement of N20m.