Key Takeaways
- Nigerian central bank issues warning circular to microfinance banks
- Circular warns microfinance banks to desist from wholesale forex activities
- Nigerian central bank has adopted a hardline approach to digital currencies
Local news outlet Punch revealed on August 21 that the Central Bank had issued a circular titled ‘’Cessation of non-permissible activity by microfinance banks,’’
The circular stated that the CBN had noticed that some microfinance banks had gone beyond the scope of their operating license and engaged in wholesale forex activities.
The document continued by adding that these activities posed a major problem to the existing financial stability of the economy.
The Apex bank concluded with a warning to defaulting microfinance banks to desist from their actions as stated in existing regulations guiding their operations in the country.
This warning follows the recent trend adopted by the Central Bank of Nigeria. Nigeria is an import-based economy that depends heavily on foreign exchange for basic needs.
This has placed a strain on the Central Bank. As a result, the apex bank has struggled to meet the ever-growing forex needs of businesses in the country.
The current CBN governor Godwin Emefiele has taken a strict approach towards perceived moves by financial organizations that undermine existing policies.
For example, Emefiele had earlier in February issued a circular that placed a blanket ban on banks and financial institutions from transacting with crypto companies.
This decision meant that crypto companies could no longer offer direct debit card payments and automated bank withdrawals.
However, despite this setback, the Nigerian crypto ecosystem has grown immensely in recent months.
The country is ranked the biggest bitcoin market, and many traders have turned to p2p platforms like Remitano to facilitate transactions.
This latest warning to microfinance banks appears to follow a similar trend, and it remains to be seen if it would be effective.
What are your thoughts on the CBN latest warning to Microfinance banks?
