CBN sets N100000 as application fee for credit guarantee companies
The Central Bank of Nigeria (CBN) has presented new guidelines for licensing, regulation and supervision of credit guarantee companies (CGCs).
A CGC is an institution licensed by the CBN with the primary objective of providing guarantees to banks and other lending financial institutions against the risk of default by obligors.
This was made known by the CBN’s director of the financial policy and regulation department, Ibrahim Tukur.
CBN said the guidelines would curb the difficulties micro, small and medium enterprises (MSMEs) face in accessing credit from the formal sector.
Tukur explained that it (guidelines) seeks to ultimately reduce credit risk, stimulate lower interest rates on loans and complement other initiatives of regulatory authorities aimed at stimulating lending to MSMEs.
The apex bank said the application for a CGC licence is in two stages: approval-in-principle (AIP) and a final licence.
“The promoters of a CGC shall be required to submit a formal application for the grant of a CGC licence addressed to the Governor of the CBN,” part of the circular reads.
“A non-refundable application fee of N100,000 (One Hundred Thousand Naira) only, or such other amount as the CBN may specify, in bank draft payable to the CBN.
“Not later than six (6) months after obtaining the AIP, the promoters of a proposed CGC shall submit an application for the grant of a final licence to the CBN.
“Non-refundable licensing fee of N1,000,000.00 (One Million Naira) only, or such amount as may be prescribed by the CBN, in bank draft payable to the CBN.”
It also said CGCs would be required to commence operations with a minimum paid-up capital of N10 billion; and N50,000 for change of company name, if necessary.
“Promoters should note that in compliance with the Banks and Other Financial Institutions Act (BOFIA) 2020, the investment of share capital deposit shall be subject to availability of investment instruments.
“Upon the grant of license or otherwise, the CBN shall refund the sum deposited to the promoters, together with the investment income, if any, after deducting administrative expenses and tax on the income,” the statement added.
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