Central Bank of
Under the new guidelines, the capital base of finance companies has been increased by 400 per cent from N20 million to N100 million.
The revised guidelines also stipulate that the appointment or replacement of the chief executive officer or any of the principal officers of any finance company "must be cleared with the CBN before such appointments are made".
"Where the turnover of principal and senior officer is considered to be unduly high or where the reason for leaving by an officer suggests an attempt to cover up a fraud or other illegal activity, or punish the officer for attempting to prevent illegal activities, the CBN shall cause an investigation to be conducted into the matter and other affairs of the company as may be considered necessary."
The deadline for compliance with the new guidelines is
Recalling the agenda of the new CBN Governor which hinged on having a people centred CBN with emphasis on job creation; businesses having access to finance, Abdullahi said all those institutions operating in the financial sector on which the CBN has purview are supposed to be strong, virile and able to perform the function for which they were established.
"So, if we are concerned about job creation and finance companies performing the functions which they were set up to do, then we have to make sure that they are strong and virile to ensure that they can perform those functions.
"That is why they have to acquire the needed capital, needed corporate governance practices and good management practices for them to perform those functions," he added.
On what happens after the expiration of the deadline, Abdullahi said finance companies that fail to recapitalise have a number of options.
"If they can transmit to other institutions for which they have the requisite capital, CBN will accept them."
He cited the mortgage banks that were unable to meet the required minimum capital which are transmitting to micro-finance banks, adding that "if the finance company does not have the stipulated capital and is able to move to another form of institution, the CBN will welcome them".
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