The Central Bank of Nigeria has threatened to sanction microfinance banks going past the mandate of their working licence to interact in overseas trade transactions.
The regulator stated some microfinance banks have engaged in wholesale banking, overseas trade transactions and others.
That is coming after CBN in July stopped supplying Bureaux De Change operators foreign exchange saying they’re “brokers that facilitate graft and corruption within the nation”. The CBN now provides foreign exchange to industrial banks for gross sales to people and companies.
The apex financial institution in a round to all of the MFBs Thursday, signed by an official on the Monetary Coverage and Regulatory Division, Ibrahim Tukur, stated sure operations by microfinance banks pose an enormous threat to the soundness of the monetary system.
“Given the comparatively low capitalization of MFBs, dealing in wholesale and or overseas trade transactions are a major threat with dire penalties for monetary stability,” it stated.
“It has due to this fact change into crucial to remind all MFBs to strictly adjust to the extant revised regulatory and supervisory tips for microfinance banks in Nigeria 2012.”
The financial institution threatened to revoke the licence of any MFBs that fails to conform.
The round said that the MFBs are prohibited from overseas trade transactions and should primarily give attention to offering monetary companies to retail and/or micro- purchasers .
The apex additionally said that micro-credit and retail transactions carried out by MFBs have been restricted to N500,000 per transaction for Tier 2 Unit MFB and N1 million for different classes.
In line with the round, the micro-credit facilities ought to represent a minimal of 80 per cent of whole loans for MFBs.
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