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Accion MFB Konnect Series: Experts Call For Clarity On Regulations for MFIs Under the GSI Framework

Debtors & Recovery	2344 VIEWS
Debtors & Recovery
2344 VIEWS

Thursday, July 30, 2020 / 8.00AM / Ottoabasi Abasiekong for WebTV / Header Image Credit: WebTV

Stakeholders in the Microfinance Banking segment of the Nigerian financial services industry have called for more clarity on the regulations and implementation of the GSI framework that is scheduled to take off from August 01, 2020.

This was part of the major thrust of the discourse on the "Implications of Global Standing Instruction & Sandbox Policies for MfBs" hosted through the Zoom Video Conferencing platform by Accion Microfinance Bank.

The discourse brought together key players in the financial services and fintech industry amongst other critical sectors in the ecosystem.

According to the MD/CEO of Accion Microfinance Bank, Mr. Taiwo Joda, it was an opportunity to brainstorm on the recent key developments and regulatory steps taken by the Central Bank of Nigeria (CBN) covering the Global Standing Instruction guidelines and Sandbox policies as they affect the operations of the Microfinance Banks.

In his remarks, Mr. Samuel Oluyemi Head, Emerging Markets & Other Financial Institutions, Nigeria Inter-Bank Settlement Systems, NIBSS explained that the Exposure draft for Regulatory Sandbox which was released by the CBN on June 23, 2020 is geared towards promoting innovation, effective service delivery, healthy competition and the deepening of financial inclusion in the country. He also stated that on July 13th, 2020, the CBN also issued a circular for the Global Standing Instruction framework, that is focused on facilitating an improved credit repayment culture, reduce Non-Performing Loans and set a watch-list for consistent loan defaulters.

Speaking on both the GSI and Sandbox regulatory provisions, Mr. Samuel Oluyemi made a strong case for the opinion of the Other Financial institutions, OFIs like the Microfinance banks to be considered in the implementation of the policy directive.

He listed the following as the key features of the Sandbox Environment:

It is an opportunity for programmers to build things from the scratch
It provides an enabling infrastructure or interfaces for innovators or fintechs.
It allows for companies/idealist to test products or services in a closed environment, geography or among a set of users.
It enables regulatory oversight subject to appropriate conditions and safeguards
It enhances the life testing of new products or services in a controlled/ lest regulatory environment.

In the area of the GSI framework, he gave a breakdown of the cycle and elements of the GSI, which consist of the following;

Points of Recoveries i.e. Deposit Accounts, Investment Accounts, Domicillary Accounts, Joint Accounts and Electronic Wallets
Due Obligations: Principal -Yes; Accrued Interests- Yes; Penal Charges â€“ No
Last resort by a Creditor Bank to recover past due obligations from defaulting Debtors: Non-Performing Loans, Substandard Loans, Doubtful Loans or Loss

He stressed the importance of full disclosure by individuals who have accounts in Nigerian financial institutions, to enable the GSI work effectively. According to him the major concern for the GSI guidelines was the need for clarity on who will be responsible for the regulation of the MFBs.

Giving her intervention at the forum the Partner, Udo Udoma & Bello-Osagie Chambers, Mrs Yinka Edu defined the Sandbox as a framework set up by financial regulators to allow operators to try out certain innovations in a controlled environment.

She said the CBN Regulatory Sandbox provision was a welcome development, as it will enhance effective regulations for the industry and will enable healthy competition amongst the fintech players. She also believes it will strengthen collaboration between the banks and fintechs with the aim of boosting financial inclusion for Nigerians.

On the GSI framework she stressed that the legal provisions guiding it will be critical to its development. In addition, she said one area that needs to be addressed is the joint accounts as it concerns the MFBs.

Dr. Femi Oyenuga, the Chief Digital Officer, Accion Microfinance Bank on his part asserted that a sandbox is designed to create public confidence in the financial services industry. He called on the MFIs to collaborate more with Fintechs to drive digitization and seamless financial services in the country.

MFIs according to him should revisit their strategies and align technology, security and the proprietary rights.