All existing microfinance banks (MfBs), primary mortgage institutions (PMIs) and finance companies are required to comply with the new directive within 18 months.
In a notice, CBN said Primary Mortgage Banks (PMBs) shall now maintain a minimum ratio of 50 percent of mortgage assets to total assets, 75 percent of which must be residential mortgages.
In addition, a minimum of 60 percent of PMBs’ loanable funds, defined as total deposits plus on-lending loans, shall be devoted to the creation of mortgage assets.
According to the CBN, the PMBs are not to engage in leasing business or take proprietary position in real estate development.
“The maximum loan from a PMB to an individual shall not exceed 5.00 percent of its shareholders’ funds unimpaired by losses and 20 per cent in the case of a corporate body. All PMBs shall be required to comply with the uniform underwriting standards for mortgages and commercial real estate financing,” CBN stated.
For MfBs, the CBN said the sector’s loan portfolio would, at all times, comprise a minimum of 80 percent micro-loans and a maximum of 20 per cent macro-loans.
The maximum loan by a MfB to any individual borrower, director or related borrower is not exceed one per cent of the shareholders’ funds unimpaired by losses, while a maximum of five per cent is prescribed for group borrowers.
Also, insider-related loans shall not exceed 5 percent of the shareholders’ funds unimpaired by losses.
In addition to the Head Office, Unit MFBs are allowed to have not more than one branch within the Local Government Area approved for their operation.
This according to the CBN directive is subject to the availability of free funds (shareholders’ funds unimpaired by losses, less fixed assets and long term investments) of at least N20 million and maintenance of the prescribed minimum prudential requirements.
The minimum capital requirement for finance companies (FC) during the programme period is now N100 million.
*Henry Ifeanyi – Cajnews