CBN Warns Microfinance Bank Against FOREX Transactions

The Central Bank of Nigeria (CBN) has warned microfinance banks in the country to stop engaging in foreign exchange transactions and other unauthorised dealings.

The apex bank disclosed this on Friday in a statement titled ‘Cessation of Non-Permissible Activities by Microfinance Banks’ issued by Ibrahim Tukur from the CBN’s Financial Policy and Regulation Department.

“The Central Bank of Nigeria (CBN) has observed the activities of some Microfinance Banks (MFBs) that have gone beyond the remit of their operating licenses by engaging in non-permissible activities especially wholesale banking, foreign exchange transactions and others,” the statement read.

“Given the comparatively low capitalisation of MfBs, dealing in wholesale and/or foreign exchange transactions are a significant risk with dire consequences for financial system stability.”

The bank noted that it had, therefore, become imperative to remind all MfBs to strictly comply with the extant Revised Regulatory and Supervisory Guidelines for Microfinance Banks in Nigeria 2012.

It then reminded all MFBs to strictly comply with the extant Revised Regulatory and Supervisory Guidelines for Microfinance Banks in Nigeria 2012 (the Guidelines).

“For the avoidance of doubt and consistent with the permissible activities of specialized micro institutions: MFBs are strictly prohibited from foreign exchange transactions”.