- CBN Issues Corporate Governance Codes to DFIs, Others
The Central Bank of Nigeria has issued codes of corporate governance to six other financial institutions in the country.
The CBN, in a circular released on Tuesday, said the code would take effect from December 1, 2018, but the full implementation would take effect from April 1, 2019.
The relevant institutions required to ensure strict compliance with their respective sector codes are Development Finance Institutions, Bureau de Change, microfinance banks, finance companies, primary mortgage banks, and mortgage refinance companies.
The circular read in part, “The Central Bank of Nigeria observed some deficiencies in the operational effectiveness of the BDCs which militate against the achievement of their objectives. To address this challenge, the CBN commenced the reform of the subsector and issued revised guidelines, which, among others, reviewed upwards the minimum capital requirement for the BDCs.”
The CBN described the DFIs as specialised financial institutions with specific mandate to support the critical sectors of the economy such as agriculture and manufacturing as well as the Micro, Small and Medium Enterprises.
It stated, “To achieve their mandates, the DFIs need to adhere to accepted governance standards, code of ethics and best practices as well as formal laws and extant regulations. This code is developed to guide licensed DFIs towards entrenching good corporate governance standards and practices to ensure that they are managed safely and soundly where risk-taking activities and business prudence are appropriately balanced so as to protect the interests of all stakeholders.”
According to the regulator, the finance companies play a complimentary role to banks in the business of financial intermediation.
The CBN said, “This segment of the financial system is expected to mobilise funds by way of borrowings, debt issuance and fund raising from local and foreign investors for lending to the SMEs.”
