The Central Bank of Nigeria (CBN) has unveiled fresh minimum standards for the operation of credit guarantee companies (CGCs). The document requires participating financial institutions (PFIs) to apply and obtain a guarantee from only CGCs licensed by it for any loan granted to medium and small-scale enterprises (MSMEs).
The regulator also said where it is satisfied that a CGC “is engaging in, has engaged in or intends to engage in an unsafe and unsound practice” in conducting its business or in any conduct that violates any provision of the guidelines, there will be sanctions.
The CBN reiterated that it reserves the right to revoke a CGC licence where there is evidence of insolvency, misuse of the license, unauthorised cessation of business for a continuous period of six months.
In the new guidelines, board and board committee meetings of CGCs shall be deemed to be duly constituted where two-thirds of members are present, provided that a majority of directors at the meeting are non-executive directors.
The board shall disclose, in the corporate governance section of the annual report, the total number of board and board committee meetings held in any financial year and attendance by each of the directors.