Nigeria: CBN issues new guidelines for microfinance banks

IN continuation of its holistic overhaul of the banking sector, the Central Bank of Nigeria (CBN), on Tuesday, released a new set of guidelines for microfinance banks (MFBs) operating in the country.

According to the apex bank, five years after the launch of Microfinance Policy, Supervisory and Regulatory Framework for Nigeria, some issues had emerged in the course of its implementation, necessitating a review of the policy framework.

It added that the review of the policy was in exercise of the powers conferred on it in the Banks and Other Financial Institutions Act (BOFIA), stating that in carrying out the review, the apex bank sent request for inputs to about 900 key stakeholders in the microfinance sub-sector.

Under the new guidelines, microfinance banks would now operate under three categories, which include unit, state and national microfinance banks.

A unit microfinance bank is authorised to operate in one location without branches/cash centres and is required to have a minimum paid up capital of N20 million.

The state microfinance bank is authorised to operate in one state or the Federal Capital Territory (FCT). It is required to have a minimum paid up capital of N100 million and is allowed to open branches within the same state or the FCT, subject to prior written approval by the CBN for each new branch.

The national micro-finance bank is authorised to operate in more than one state, including the FCT. It is required to have a minimum paid up capital of N2 billion and is allowed to open branches in all states of the federation and the FCT, although subject to prior written approval by the CBN.

On ownership, the apex bank said MFB could be established by individuals, groups of individuals, community development associations, private corporate entities, non-governmental organisations or foreign investors, adding that “no individual, group of individuals, their proxies or corporate entities and/or their subsidiaries shall own controlling interest in more than one MFB, except as approved by the CBN.”