The Central Bank of Nigeria (CBN) has issued a stern directive to Microfinance Banks (MFBs), Primary Mortgage Banks (PMBs), and Development Financial Institutions (DFIs), mandating them to submit their financial returns monthly through the FinA application. Failure to comply with this directive may result in sanctions, according to three separate letters signed by Valentine Ururuka, PhD, the Director of the Financial Policy and Regulatory department at the CBN.
The letters, addressed to the respective financial institutions, underscore the importance of timely submission of financial returns and highlight the consequences of non-compliance with regulatory requirements. The CBN emphasized the provisions of section 24 of the Banks and Other Financial Institutions Act (BOFIA), 2020, and other extant regulations governing the submission of regulatory returns.
Microfinance Banks (MFBs)
In the letter directed to Microfinance Banks, the CBN expressed dismay over the late and non-rendition of periodic returns on FinA. MFBs were reminded of their obligation to adhere to regulatory guidelines and ensure the timely submission of monthly FinA returns. The CBN instructed MFBs to submit their financial returns on or before the 5th day after the month-end, with provisions for submissions falling on weekends or public holidays.
The warning issued to MFBs emphasized the importance of compliance with regulatory requirements and stressed that future breaches would result in sanctions.
Primary Mortgage Banks (PMBs) and Development Financial Institutions (DFIs)
Similar letters were also sent to Primary Mortgage Banks and Development Financial Institutions, reiterating the need for timely submission of financial returns. PMBs and DFIs were reminded of their obligations under the BOFIA, 2020, and were instructed to ensure that monthly FinA returns are submitted promptly.
The CBN reiterated that failure to adhere to regulatory guidelines would result in sanctions, underscoring the seriousness of compliance with financial reporting requirements.
Impact on Financial Institutions
The directive from the CBN carries significant implications for financial institutions operating in Nigeria. Compliance with regulatory reporting requirements is essential for ensuring transparency, accountability, and effective oversight within the financial sector.
By mandating the submission of monthly financial returns through the FinA application, the CBN aims to streamline the reporting process, enhance data accuracy, and facilitate timely decision-making. This initiative aligns with the CBN’s broader efforts to promote financial stability and strengthen regulatory oversight in Nigeria’s banking and financial services industry.
For Microfinance Banks, Primary Mortgage Banks, and Development Financial Institutions, the timely submission of financial returns is not only a regulatory obligation but also a fundamental aspect of sound financial management practices. Failure to comply with regulatory requirements can undermine investor confidence, erode trust in the financial system, and potentially expose institutions to legal and reputational risks.
The CBN’s warning of sanctions underscores the seriousness with which regulatory compliance is viewed and serves as a reminder to financial institutions of the consequences of non-compliance. Institutions that fail to meet the stipulated deadlines for financial reporting may face penalties, fines, or other regulatory actions, which could have adverse implications for their operations and reputation.
Moving Forward
In light of the CBN’s directive, financial institutions are urged to prioritize compliance with regulatory reporting requirements and ensure the timely submission of monthly financial returns through the FinA application. This entails establishing robust internal controls, implementing effective reporting processes, and allocating adequate resources to facilitate compliance efforts.
Furthermore, financial institutions should proactively engage with regulatory authorities, seek clarification on reporting requirements, and address any challenges or concerns related to compliance. By demonstrating a commitment to regulatory compliance and transparent financial reporting, institutions can uphold the integrity of the financial system, safeguard stakeholders’ interests, and contribute to the overall stability and resilience of Nigeria’s banking sector.
In conclusion, the CBN’s directive underscores the importance of regulatory compliance and reinforces the accountability of financial institutions in Nigeria. By adhering to regulatory reporting requirements and fulfilling their obligations, financial institutions can contribute to a stronger, more resilient financial ecosystem that supports sustainable economic growth and development.
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