Cbn new policy for operatingmicro finance
The Central Bank of Nigeria (CBN) has introduced a new policy for operating microfinance banks in Nigeria. The policy, which was announced in 2020, aims to strengthen the microfinance sector and promote financial inclusion in the country. Here are some key highlights of the new policy:
- Minimum Capital Requirement: The CBN has increased the minimum capital requirement for microfinance banks from N20 million to N500 million. This is to ensure that microfinance banks have sufficient capital to operate efficiently and effectively.
- Licensing Requirements: The CBN has introduced new licensing requirements for microfinance banks, including the submission of a business plan, financial projections, and a comprehensive risk assessment.
- Governance Structure: The CBN has introduced a new governance structure for microfinance banks, which includes a board of directors, a management team, and a supervisory committee.
- Risk Management: The CBN has emphasized the importance of risk management in microfinance banking, and has introduced new guidelines for risk assessment and management.
- Liquidity Requirements: The CBN has introduced new liquidity requirements for microfinance banks, including the maintenance of a minimum liquidity ratio of 20%.
- Prudential Guidelines: The CBN has introduced new prudential guidelines for microfinance banks, including guidelines for loan provisioning, asset classification, and provisioning for bad debts.
- Customer Protection: The CBN has emphasized the importance of customer protection in microfinance banking, and has introduced new guidelines for customer protection, including guidelines for account opening, loan disbursement, and debt recovery.
- Technology Adoption: The CBN has encouraged microfinance banks to adopt technology to improve their operations, including the use of digital platforms for loan disbursement, account opening, and customer service.
- Supervision and Regulation: The CBN has strengthened its supervision and regulation of microfinance banks, including regular on-site inspections, off-site monitoring, and enforcement of regulatory requirements.
- Training and Capacity Building: The CBN has emphasized the importance of training and capacity building for microfinance bank staff, including training on risk management, customer service, and financial inclusion.
Overall, the new policy aims to promote financial inclusion, improve the stability and efficiency of the microfinance sector, and enhance the overall effectiveness of microfinance banks in Nigeria.