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Central Bank of Nigeria (CBN) Governor Olayemi Cardoso has expressed concern over the rising volume of non-bank transactions, which he said, threatens financial stability in West Africa.
Cardoso stated this on Monday at the 10th meeting of the Supervisory Board of Non-Bank Financial Institutions of the West African Monetary Zone.
Cardoso, represented by the Acting Director of the central bank’s Other Financial Institutions Department, Abayomi Arogundade.
He said, “We reiterate the importance of monitoring trends, risks, and innovations in Non-Bank Financial Institutions (NBFIs)/Other Financial Institutions (LKBN) because the increase in the volume of LKBN/other LN transactions poses a major risk to the stability of the financial system.
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“Fintech lending is one of the most frequently reported innovations. While overall this may seem small compared to the amount of credit provided by DMBs, several jurisdictions around the world have noted an upward trend in the volume of these loans.
“In many cases, fintech credit is provided through electronic platforms that connect lenders with borrowers – in this case the platform acts as an additional financial institution.
“However, in some cases, loans are taken from the balance sheets of these platforms (albeit short-term), in which case the platforms are similar to a new type of intermediary financial institution. These entities are typically financial technology companies that offer apps, software and other technologies to simplify mobile and online banking.
“In many jurisdictions, these digital companies have banking licenses and are subject to prudential requirements or may simply be regulated as Fintech payment services companies. Innovations related to crypto assets or stablecoins have also been reported by several jurisdictions.”
Non-bank financial companies offer financial services but do not have a banking license and therefore cannot accept deposits.
By: Babajide Okeowo
Non-bank transaction volume poses threat to West Africa’s financial stability – Cardoso first appeared on Latest Nigeria News | Top Stories from Ripples Nigeria.
