CBN strengthens corporate governance in primary, mortgage finance institutions

Central Bank of Nigeria (CBN) has developed corporate governance in other financial institutions, including microfinance banks (MFBs), Bureau De Change (BDCs), Development Finance Institutions (DFIs), Primary Mortgage Banks (PMBS), Mortgage Refinance Companies, and Finance Institutions (FIs).

This is to strengthen governance practices, ensure high ethical conduct and provide minimum acceptable governance standards for these institutions.

In an exposure draft signed by Kelvin Amugo, director, financial policy and regulation, the CBN seeks comments and inputs from stakeholders on this regard.

Consequently, the exposure draft states that the size of the Board of any BDC shall be limited to a minimum of three and a maximum of five.

It says members of the Board shall be qualified persons of proven integrity and shall be knowledgeable in business and financial matters, or as may be prescribed by their respective guidelines.

Furthermore, the Board of BDCs shall comprise of at least one independent director with proven integrity and knowledgeable in business and financial matters for a term not more than five years.

“In order to foster good corporate governance, BDCs are required to make timely, quality and robust disclosure beyond the statutory requirements in BOFIA 1991 as amended, CAMA 1990, monetary policy guidelines, all rules and regulations as well as circulars issued by the CBN on foreign exchange activities/business from time to time,” the exposure draft states.

For DFIs, number of directors on the Board shall be a minimum of seven and a maximum of 11 or in accordance with the Act establishing the institution.

The Board shall consist of Executive (EDs) and Non-Executive Directors (NEDs) with more than 50 percent comprising of NEDs. The Board of a DFI shall consist of a minimum of one and a maximum of two independent directors as stipulated in the CBN guidelines on the Appointment of Independent Directors.

Hope Moses-Ashike