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Recent new capital base for mortgage firms set by the Central Bank of Nigeria (CBN) has continued to elicit reactions from industry experts.
Recall that the apex bank had earlier in the week, set a minimum capital requirement of N10 billion for Mortgage Guarantee Companies (MGCs) in the country as a way of encouraging more investors in the housing delivery sector.
The new regulation, according to its circular: ‘Regulations for the operations of mortgage guarantee companies in Nigeria, is an improvement upon the exposure draft on the operations of Mortgage Guarantee Companies, issued last year.
The apex bank explains that the licensing process for MGCs will consist of two stages: Approval in Principle (AIP) and Final Approval. The directive adds that the new financial requirements might be varied as considered necessary.
The new requirements were a minimum paid-up capital of N10 billion; non-refundable application of N100,000; a non-refundable licensing fee of N100 million and change of name fee of N50,000. The CBN stated that the MGCs must not engage in activities such as acceptance of demand; savings and time deposits; grant consumer, commercial or mortgage loans, among others.
It also said that a MGC must maintain a capital adequacy ratio of more than 100%, determined by comparing the available solvency margin with the required solvency margin.
However, a number of housing supply experts who spoke with our correspondents welcomed the new capital base, saying it will among other things, encourage new investors and drive efforts to bridge the rising housing deficit in the country.
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