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CBN Unveils Guidelines on Non-interest MFBs

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  • CBN Unveils Guidelines on Non-interest MFBs

In line with its mandate of promoting a sound financial system, the Central Bank of Nigeria (CBN) has issued guidelines on the regulation and supervision of non-interest (Islamic) microfinance banks (NIMFBS) in the country.

Part of the 57-page guidelines posted on the central bank’s website recently stated that a NIMFB shall be required to maintain not less than five per cent of deposit liabilities in liquidity management instruments compliant with the principles underpinning this model and as approved by the CBN.

According to the CBN, non-compliance with this directive shall attract a fine of one per cent of the amount not invested. Investment in such instruments by any MFB shall, however, not exceed 10 per cent of its deposit liabilities at any point in time.

Furthermore, it noted that the operation of a NIMFB requires the maintenance of high quality liquid assets to meet frequent request for funds from clients and for field operations.

However, in view of the paucity of eligible liquidity management instruments, NIMFBs shall be required to maintain a minimum liquidity ratio as may be determined by CBN from time to time.

The Capital Adequacy Ratio (CAR) of a NIMFB shall be measured as a percentage of shareholders’ funds unimpaired by losses to its risk weighted assets, the CBN added.

In addition, the minimum CAR (Capital/Weighted Assets Ratio) for NIMFB shall be one per cent of such percentage as may be determined by the CBN from time to time.

Also, the NIMFB shall be required to submit, within a specified period, a recapitalisation plan acceptable to the CBN.

“Failure to comply with the above shall constitute grounds for the revocation of the operating licence of the NIMFB or such other penalties as may be deemed appropriate.

“Every NIMFB is enjoined to ensure its shareholders’ funds unimpaired by losses do not fall below the prescribed minimum capital requirement, notwithstanding meeting the capital adequacy benchmark.

“The maximum amount which a NIMFB can invest in fixed assets is 20 per cent of its shareholders’ funds unimpaired by losses.

“Any contravention shall attract a penalty of one per cent of the excess investment in fixed asset and prohibition of further investment in fixed assets until the requirement is achieved,” it added.

According to the CBN, the impact of delinquent risk assets which may result in capital erosion, calls for stringent maintenance of capital funds. Every NIMFB shall therefore maintain a reserve fund into which it shall transfer from its profit after tax for each year.

The CBN said the guidelines were developed to provide a level playing field between the conventional and non-interest MFBs and to address issues underpinning the operation of non-interest financial institutions. It is expected to enhance financial inclusion by bringing to the formal sector, individuals, communities and corporations that are not captured by the conventional MFBs.

The role of MFBs in poverty reduction, increased access to financial services, contribution to financial stability and economic development has been established in Nigeria and around the globe. Beyond making credit facilities available to micro, small and medium scale enterprises and the promotion of savings culture, MFBs also serve as veritable means of employment generation and enhancing financial inclusion.

Since 2005 when the CBN issued the first regulatory framework for MFBs in Nigeria (revised in 2013), a number of MFBs were established across all states in Nigeria and Abuja and have continued to thrive and cater for the economically active poor in the country.

However, despite the increased number of MFBs in Nigeria, a large per cent of Nigerians still lack access to financial services. This could be attributed to high cost of transactions, abhorrence of interest and apathy to unethical investment by a significant part of the populace.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Insurance

Heirs Insurance Group Unveils Revolutionary Website for Seamless Insurance Experience

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Heirs Insurance Group has launched a website designed to revolutionize the insurance experience for its customers.

With a focus on simplicity, accessibility, and personalized service, the new website aims to streamline the process of obtaining insurance coverage and empower customers to make informed decisions about their insurance needs.

The website boasts a range of innovative features that make navigating insurance options easier than ever before.

From simple and intuitive navigation menus to personalized insurance recommendations, the website is designed to guide customers through every step of the insurance process quickly and efficiently.

According to Ifesinachi Okpagu, the Chief Marketing Officer of Heirs Insurance Group, the new website embodies the company’s commitment to delivering exceptional customer service.

“Today’s customers want simplicity, and this new website delivers on that request,” Okpagu said. “We are empowering customers to take control of their lives, their businesses, assets, and their most cherished people.”

One of the key features of the website is its personalized insurance experience, which takes customers through a short journey to help them identify the best insurance plan for their needs.

Whether customers are looking for coverage for their home, car, business, or loved ones, the website provides tailored recommendations to ensure they find the right insurance solution quickly and easily.

With its user-friendly interface and innovative features, the new website from Heirs Insurance Group sets a new standard for the insurance industry, making it easier than ever for customers to protect what matters most to them.

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Banking Sector

Safaricom, Access Holdings Forge Partnership to Revolutionize Remittance Corridor in Africa

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Safaricom, the leading telecommunications company in Kenya, has entered into a strategic partnership with Access Holdings, spearheaded by Aigboje Aig-Imoukhuede.

The collaboration aims to revolutionize the remittance corridor between East and West Africa, marking a significant step towards enhancing financial inclusion and empowering millions of individuals across the continent.

The partnership comes on the heels of Access Holdings’ recent acquisition of the National Bank of Kenya Limited, signaling the company’s ambitious expansion into the East African market.

Leveraging Safaricom’s extensive network and expertise in mobile money through M-Pesa, which currently dominates the mobile money market in Kenya, the alliance seeks to create seamless and efficient channels for remittance transactions.

Aigboje Aig-Imoukhuede, the driving force behind Access Holdings, expressed enthusiasm about the collaboration, highlighting its potential to transcend traditional boundaries and foster greater economic connectivity between East and West Africa.

He highlighted the fusion of collective expertise and resources between the two entities, underlining their shared commitment to driving financial inclusion and empowerment across the continent.

The partnership holds promise for addressing the challenges faced by millions of Africans in accessing affordable and reliable remittance services.

By connecting more than 60 million customers and 5 million businesses across eight countries, the collaboration aims to facilitate over $1 billion in daily transaction value, significantly boosting the flow of remittances within and outside Africa.

With the first phase of the collaboration focusing on key markets such as Nigeria, Kenya, Ghana, and Tanzania, stakeholders anticipate a transformative impact on the remittance landscape, paving the way for greater intracontinental trade and economic integration in line with the objectives of initiatives like the African Continental Free Trade Area (AfCFTA).

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Banking Sector

EFCC Urged to Repatriate Recoveries to NDIC for Depositors’ Relief

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The Nigeria Deposit Insurance Corporation (NDIC) has made a fervent plea to the Economic and Financial Crimes Commission (EFCC) to expedite the repatriation of recovered funds to its coffers to facilitate the timely reimbursement of depositors affected by bank failures.

During a recent meeting between the Managing Director of NDIC, Bello Hassan, and the Executive Chairman of the EFCC, Ola Olukoyede, at the NDIC headquarters in Abuja, Hassan stressed the importance of enhanced collaboration between the two agencies in recovering depositors’ funds lost due to bank failures.

Hassan emphasized that the return of recoveries made by the EFCC on behalf of the NDIC would significantly contribute to the prompt reimbursement of affected depositors.

He commended the EFCC for its unwavering efforts in combating corruption and financial crimes, highlighting its crucial role as a key member of the Taskforce on Implementation of the Failed Banks Act chaired by the NDIC.

The NDIC boss also highlighted the existing partnership between the two organizations, which led to the establishment of the NDIC Help Desk at the EFCC in 2022.

He disclosed that several high-profile cases referred to the EFCC were currently under investigation.

In response, Olukoyede reiterated the EFCC’s commitment to collaborating closely with the NDIC to combat financial crimes and safeguard the integrity of the Nigerian banking sector.

He pledged to intensify efforts to repatriate recovered funds promptly, acknowledging the interconnectedness between criminal activities and bank failures.

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