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CBN declines PMIs’ request for N3bn capital base

Yinka Kolawole
There are indications that the Central Bank of Nigeria (CBN) has rejected the request that the capital base of primary mortgage institutions (PMIs) be pegged at N3 billion.

The Mortgage Banking Association of Nigeria (MBAN), which is the umbrella body of PMIs in Nigeria, had solicited that the capital base be reduced to N3 billion from the N5 billion proposed by the apex bank as contained in a CBN circular on review of universal banking model in March.

However, Vanguard checks with both the CBN and MBAN revealed that the initial proposal of N5 billion capital base for mortgage banks is likely to be maintained.

The CBN had resolved that PMIs should have a minimum shareholders funds of N5 billion, from the current N100 million. It also specified permissible activities for PMIs as: mortgage finance; financial advisory services for mortgage customers; and taking  savings and term deposits, while they are barred from: demand deposits; equity investment in property development; estate agency/facilities management; project management for a real estate development; and management of pension funds/ schemes.

Vanguard was however unable to ascertain the current position on the barring of PMIs from taking demand deposits, equity investment in property development; estate agency/facilities management; project management for a real estate development; and management of pension funds/ schemes.

If they are to stay excluded from these activities, it will amount to a total reversal of the CBN guidelines for PMIs released by the apex bank in August 2003.

The 2003 guidelines expressly stipulated permissible activities of PMIs to include: offering of technical advisory services for the purchase or construction of a dwelling house; performing estate management duties; offering of project consultancy services for estate development; engaging in estate development through loan syndication, subject to the restriction imposed by the shareholders’ funds unimpaired by losses; and engaging in property trading including land acquisition and disposal, among others.


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