Regulatory Alerts2018-10-17 | FPR/DIR/GEN/CIR/07/015Exposure Draft on The Regulation For The Operations of Mortgage Guarantees Companies (MGC) in Nigeria
The Central Bank of Nigeria (CBN) is proposing the introduction of Mortgage Guarantee Companies (MGCs) to promote mortgage financing and advance home ownership. MGCs are designed to increase access to mortgage finance and enhance credit risk with mortgage lending institutions. The Exposure Draft on the Regulation for the Operations of MGCs in Nigeria is issued for comments and observations. The document outlines the basic requirements for MGCs, including their principal line of business, capital requirements, permissible investments, and liquidity requirements. The CBN will exercise powers such as granting and revoking licenses, determining minimum capital requirements, and approving the appointment of board members and senior management staff. MGCs will engage in activities such as guaranteeing residential mortgage loans, investing in government securities, and issuing bonds and notes to fund operations. They will not accept deposits, grant loans, or engage in foreign exchange trading. The licensing process will consist of two stages: Approval in Principle and Final Approval. The financial requirements include a minimum capital of N6,000,000,000.00 and non-refundable application and licensing fees. The Board of Directors will be responsible for the MGC's operations, with a minimum of seven and a maximum of eleven directors.