Bureau de Change activities in the country were banned on July 27th this year, because the CBN (Central Bank of Nigeria) accused this intermediary level, of using this service as a cover for carrying out scrupulous financial activities. In the wake of that directive, only commercial banks were given the authority to transact and engage foreign exchange activities.
Now, according to the CBN, some Microfinance banks have been engaging in illegal activities that they have been restricted to carry out by law, one which includes foreign exchange .
The CBN has warned that they should desist from offering these non-permissible activities, especially that of foreign exchange and wholesale banking transactions.
In a statement titled: “Cessation of non-permissible activities by MFBs”, the financial services regulator noted that some MFBs are engaging in non-permissible activities which pose risk to the financial system.
The statement which was signed by Ibrahim Tukur, the Director of the Financial Policy and Regulation Department of the CBN stated: “The Central Bank of Nigeria has observed the activities of some MFBs that have gone beyond the remit of their operating licenses by engaging in non-permissible activites especially wholesale banking, foreign exchange and others. Given the comparatively low capitalization of MFBs, dealing in wholesale and/or foreign exchange transactions are a significant risk with dire consequence for financial system stability. Thus, therefore, become imperative to remind all MFBs to strictly comply with the extant Revised Regulatory and Supervisory Guidelines for MFBs 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; MFBs are to primarily focus on providing financial service to retail and/or micro clients; Micro credits and retail transactions carried out by MFBs are limited to 500,000 per transaction tier 2 unit MFBs and 1,000, 000 for other categories; and Micro credit facilities shall constitute a minimum of 80% of total loans portfolio for MFBs”.
The CBN has however concluded that it will continue to monitor developments and apply severe sanction measures for MFBs who breach extant regulations , including revoking the license of erring MFBs (in line with section 19 of the guideline).