An insider at the Finance Houses Association of Nigeria (FHAN) said despite securing stakeholders’approvals in critical areas, especially in the drive to raise capital base from N20 million to about N100 million, the other elements are not yet in place.
The source said stakeholders expect the reforms to be unfolded by the CBN before the end of this quarter. It is also expected that the reforms will expand the funding structure of the subsector to allow new investors into it.
Findings showed that the CBN Board of Governors will release new prudential guidelines for the subsector that also include raising the capital base.
Other policy issues, such as the appointment of Managing Directors will form part of the ongoing reforms in the subsector.
The source said CBN is also considering developing a regulatory framework that will govern finance lease practice, institutionalise a “funding pool” to stimulate lending in the sub-sector and structure programme to address the subsector’s challenges.
Other pending issues, such as withdrawal of licences of 47 finance houses whose liquidity were called to question last May, and funding for the subsector are also being looked into. The source said progress is being made now, unlike before when nothing was happening in the subsector.
In a statement, FHAN President Samuel Durojaye said the reforms would transform the sub-sector to enable it to play increasing role in the financing value chain.
He urged FHAN members to support CBN’s efforts at strengthening the regulatory environment by regular and timely rendering of statutory returns and reports, and the renewal of their licences yearly.
Unlike banks, finance companies are not allowed to accept deposits. This means they can only source funds from shareholders, private equity companies, development finance institutions and other institutional investors.