The Central Bank of Nigeria has pegged the maximum loan limit for tier 2 Unit Microfinance Banks (MFBs) in the country at N500,000 per transaction and N1 million per transaction for other categories.
Microfinance Banks are also “strictly prohibited” from engaging in foreign exchange transactions.
This was disclosed in a circular to all MFBs titled: Cessation of non-permissible activities by Microfinance Banks”.
The CBN noted that the MFBs are going beyond their operating licenses and engaging in non-permissible activities, especially wholesale banking, foreign exchange transactions and others.
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The apex bank said that these transactions are risky with serious consequences for financial system stability considering the low capitalization of MFBs.
MFBs’ primary focus is “providing financial services to retail and/or micro-clients,” CBN stated, adding that micro-credit facilities shall constitute a minimum of 80% of total loans portfolio for MFBs.
The CBN warned that the breach of the extant regulations shall attract serious regulatory sanctions including revoking the license of non-compliant MFBs.
Ifunanya Ikueze is an Engineer, Safety Professional, Writer, Investor, Entrepreneur and Educator.