CBN to tighten rules for microfinance banks

Tougher rules for microfinance banks in Nigeria could soon be put in place, authorities have confirmed.

Tougher rules for microfinance banks in Nigeria could soon be put in place, authorities have confirmed.

According to the Central Bank of Nigeria (CBN), financial institutions need to receive the proper approval before operating a branch or cash centre under Section 13.1(b) of the revised guidelines for microfinance banks, This Day reports.

As a result, any facility that is currently up and running despite not being approved by the central bank could be shut down inside 30 days and handed a hefty fine.

The CBN also warned failing to adhere to a directive it issues could prompt it to revoke a microfinance bank's licence.

Unit microfinance banks could face penalties of N250,000 per branch, while the fine for a state or national outlet would be N500,000 and N1 million per branch respectively.

The CBN added that it is "pertinent" to remind microfinance banks of the type of punishments they would be likely to face for operating without approval.