HomeNewsCBN bars MFBs from forex transactions, wholesale banking

CBN bars MFBs from forex transactions, wholesale banking





The Central bank of Nigeria has barred MicroFinance bank from foreign exchange transactions, terming such businesses as “non-permissible.”

In a Circular number FPRD/DIR/PUB/CIR/01/020, dated August 19, 2021 the apex bank said that some MFBs were engaging in wholesale banking and forex transactions which posed great risks for the system, as they were not financial capable of undertaking such transactions.

The CBN therefore directed that the banks refrain from activities for which they are not licensed, as such breaches would attract regulatory sanctions, including revocation of licences.

The circular read in full, “The Central Bank of Nigeria has observed the activities of some MBFs that have gone beyond the remit of their operating licences by engaging in non-permissible activities especially wholesale banking, foreign exchange transactions and others.

- Advertisement -

“Given the comparatively low capitalization of MFBs, dealing in wholesale banking and/or foreign transactions are a significant risk with dire consequences for financial systems stability.

“It has therefore become imperative to remind all MFBs to strictly comply with the extant Revised Regulatory and Supervisory Guidelines for MFBs in Nigeria 2012 (Guidelines).

“For the avoidance of doubt and consistent with the permissible activities of specialized micro institutions , MFBs are strictly prohibited from foreign exchange transactions; MFBs are to primarily focus on providing financial services to retail and /or micro clients; micro credit and retail transactions carried out by MFBs are limited to N500, 000 per transaction for Tier 2 Unit MFBs and N 1 million for other categories; micro credit facilities shall constitute 80 per cent of total loans portfolio for MFBs

- Advertisement -

“The CBN will continue to monitor developments in the MFB sector and apply severe regulatory sanctions for breaches of extant regulations , including revoking the licence of non-compliant MFBs ( in line with section 19 of the Guidelines).”

- Advertisement -

We Want Your Kind Support

Reporting the cradle of Islam requires a lot of money. We will not be deterred in our task by bringing to you instant happenings around the world, particularly as it concerns Islam. Keeping all our readers informed and educated is our goal.

Click Here to Join Our WhatsApp Group

For continued free access to in-depth news and detailed information, kindly consider making a modest donation to this noble cause.
Help to sustain reportage of Islam all around the globe and ensure everyone gets free access to it at all times.



Kaaba News E-Magazine



Let’s be patient with govt, it’ll be better soon — Tinubu-Ojo

The Lagos state grand Khalifa of Tijaniyya, Sheikh Aminullah Abd'Salam Akoshile,  has said the current hardship is a test from Allah, urging Muslims to...

Adeleke launches N3.4bn revolving cooperative loan scheme