The waves of reforms sweeping across the financial sector would soon reach the Finance Companies as the Central bank of Nigeria (CBN) is initiating moves to reform the sub-sector and reposition it for greater effectiveness.
The apex bank, in its Monetary, Credit, Foreign Trade and Exchange Policy Guidelines for fiscal years 2012/2013 released yesterday, said the reforms are expected to cover minimum capital requirements, expansion of the scope of activities and the revision of guidelines for the sub-sector.
For the Primary Mortgage Banks (PMBs), the CBN is introducing specialised second-tier institutions that would provide short-term liquidity, long-term funding or guarantees to mortgage originators and housing finance providers.
According to the apex bank, reforms of the PMBs shall, amongst other things, target the enhancement of access to mortgage/housing finance through re-capitalisation and re-focusing of the PMBs, introduction of sound risk management, strong corporate governance, and the promotion of secondary mortgage market through supporting the evolution of specialised Mortgage Re-finance/Liquidity Companies.
Primary Mortgage Banks currently have minimum capitalisation of N2.5 billion to operate at State level and N5.0 billion to operate at the national level.
The CBN also said it would sustain the implementation of the Microfinance Certification Programme for Microfinance Banks (MFBs). The apex bank also retained capital requirements of N20.0 million, N100.0 million and N2.0 billion for unit, state, and national microfinance banks, respectively, adding that it would continue to licence microfinance banks under these categories.
For Development Finance Institutions (DFIs), the CBN said it would in the 2012/2013 fiscal year continue to monitor their operations and intensify efforts at re-capitalising the institutions, institutionalising strong corporate governance and a risk management system to enable the institutions effectively deliver on their mandates. The Bank shall also continue to enforce the Uniform Prudential and Assessment Standards prescribed for DFIs in Africa, developed under the aegis of the Association of African Development Finance Institutions (AADFI) for benchmarking operations of the DFIs.
“All Other Financial Institutions (OFIs) are required to strictly comply with the prudential requirements specified in the existing guidelines/circulars, directives and provisions of BOFIA CAP B3 Laws of the Federation of Nigeria, 2004.”
Appropriate sanctions shall be imposed on any OFI found in contravention of the prudential guidelines, circulars, directives or provisions of the BOFIA, 2004,” the apex bank said.