CBN widens micro-finance banks scope of operation

The Central Bank of Nigeria (CBN) has widened the permissible activities of Micro Finance Banks (MfBs) to include the issuance of commercial papers (CPs) and appointment of agents under the Agency Banking Model.

The CBN also said that MfBs can now invest in money market instruments including Nigerian Treasury Bills (TBs) and access intervention funds.

The apex bank disclosed this, on Wednesday, in the Exposure Draft of the Revised Guidelines for the Regulation and Supervision of Microfinance Banks in Nigeria.

Explaining the rationale for the revised guideline, the CBN said: “The need to reposition and strengthen MfBs towards improved performance has become apparent as revealed from the report of a recent review of the subsector.

Accordingly, the 2012 guideline has been reviewed to strengthen and complement other ongoing reform in the MfB sub-sector. An exposure draft of the reviewed guideline is hereby issued for comments and observations.”

Highlighting the permissible activities of MfBs, the guidelines stated: “An MfB shall be allowed to engage in the provision of the following services to its clients: Acceptance of various types of deposits including savings, time, target and demand deposits from individuals, groups and associations; Provision of credit to its customers; Provision of housing microloans; Provision of ancillary services such as capacity building on record-keeping and small business management and safe custody; Issuance of debentures to interested parties to raise funds from members of the public with the prior approval of the CBN;

“Collection of money or proceeds of banking instruments on behalf of its customers including clearing of cheques through correspondent banks; Act as agent for the provision of mobile banking, micro-insurance and any other services as may be determined by the CBN from time to time, within the geographic coverage of its licence;

Appoint agents to provide financial services on its behalf in line with the CBN Agent Banking Guidelines, within the geographic coverage of its licence; Provision of payment services such as salary, gratuity, pension for employees of the various tiers of government; Provision of loan disbursement services for the delivery of the credit programme of government, agencies, groups and individual for poverty alleviation on non-recourse basis; “Provision of banking services to its customers such as domestic remittance of funds; Maintenance and operation of various types of account with other banks in Nigeria; m. Investment of its surplus funds in suitable money market instruments approved by the CBN;

“Provision of microfinance related guarantees for its customers; Financing agricultural inputs, livestock, machinery and industrial raw materials to low- income persons; Investment in cottage industries and income generating projects for low-income persons as may be prescribed by the CBN from time to time.