CBN Unveils Guidelines on Non-interest MFBs
In line with its mandate of promoting a sound financial system, the Central Bank of Nigeria (CBN) has issued guidelines on the regulation and supervision of NIMFBS in the country. Page 23
In line with its mandate of promoting a sound financial system, the Central Bank of Nigeria (CBN) has issued guidelines on the regulation and supervision of non-interest (Islamic) microfinance banks (NIMFBS) in the country.
Part of the 57-page guidelines posted on the central bank’s website recently stated that a NIMFB shall be required to maintain not less than five per cent of deposit liabilities in liquidity management instruments compliant with the principles underpinning this model and as approved by the CBN.
According to the CBN, noncompliance with this directive shall attract a fine of one per cent of the amount not invested. Investment in such instruments by any MFB shall, however, not exceed 10 per cent of its deposit liabilities at any point in time.
Furthermore, it noted that the operation of a NIMFB requires the maintenance of high quality liquid assets to meet frequent request for funds from clients and for field operations.
However, in view of the paucity of eligible liquidity management instruments, NIMFBs shall be required to maintain a minimum liquidity ratio as may be determined by CBN from time to time.
The Capital Adequacy Ratio (CAR) of a NIMFB shall be measured as a percentage of shareholders’ funds unimpaired by losses to its risk weighted assets, the CBN added.
In addition, the minimum CAR (Capital/Weighted Assets Ratio) for NIMFB shall be one per cent of such percentage as may be determined by the CBN from time to time.
Also, the NIMFB shall be required to submit, within a specified period, a recapitalisation plan acceptable to the CBN.
“Failure to comply with the above shall constitute grounds for the revocation of the operating licence of the NIMFB or such other penalties as may be deemed appropriate.
“Every NIMFB is enjoined to ensure its shareholders’ funds unimpaired by losses do not fall below the prescribed minimum capital requirement, notwithstanding meeting the capital adequacy benchmark.
“The maximum amount which a NIMFB can invest in fixed assets is 20 per cent of its shareholders’ funds unimpaired by losses.
“Any contravention shall attract a penalty of one per cent of the excess investment in fixed asset and prohibition of further investment in fixed assets until the requirement is achieved,” it added.
According to the CBN, the impact of delinquent risk assets which may result in capital erosion, calls for stringent maintenance of capital funds. Every NIMFB shall therefore maintain a reserve fund into which it shall transfer from its profit after tax for each year.
The CBN said the guidelines
Chairman, Senate Committee on Banking, Insurance and Other Financial Institutions, Senator Rafiu Ibrahim has said that the current monetary policies put in place by the Central Bank of Nigeria (CBN) would lead the country out of recession.
Ibrahim, a Senator representing Kwara South senatorial district made the assertion during the special Easter prayers session organised by the Christian Association of Nigeria (CAN) to mark this year Easter celebration.
The special Easter prayer programme was well attended by CAN representatives in all the seven local government councils of Offa, Oyun, Ifelodun, Irepodun, Oke-Ero, Ekiti and Isin that make up Kwara South senatorial district of the state.
Ibrahim said: “The new efforts have started yielding positive effects in the economic stability of the nation’s currencies that would go a long way of accelerating the socio economic growth of the country.
The CBN is currently working tirelessly to stimulate the economy through its current economic policies management.”
The Senator declared: “The CBN is managing the economy very well now and I know that it will surely lead the economy into prosperity and stability.
“The recession is global, but we hope that at least, we will be able to manage our own, so that we will not go into depression.
“And we are also hopeful with the way the resource is managed and another thing is that this government is very prudent, accountability is number one under this our President, and with the help of the National Assembly, we know that the nation will continue to forge ahead.”
He noted that, the relationship between the Senate Committee on Banking, Insurance and other Financial Institution is proactive.
“The current leadership of the Central Bank of Nigeria is very proactive. They discuss with us on the way forward on the economic growth of the country in the National Assembly and this has continued to bring positive development on what the nation is experiencing now as far as dwindling dollar rate in the country”, he said.
The lawmaker who lauded the leadership of CAN in the local government for their fervent prayers said that the development has manifested on the peaceful co-existence of the people of the state and the country in particular.
He added: “I feel alive, and I give thanks to Almighty God and the whole Christian community for their putting our love in their heart, and they prayed for the whole State.”
The lawmaker therefore called on religious faithfuls in the country not to rest on their oars by continuing to pray fervently for the political and economic development of the country.