Business
Banks Acceptances: CBN Issues Guidelines
In order to ensure uniform practise and correct treatment of Bank as Acceptances and Commercial papers by Banks and discount houses in Nigeria, the Central Bank of Nigeria has issued guidelines aimed at deepending and facilitating the effective and efficient functioning of the Nigerian money market.
The apex bank’s publications on Thursday, said the guideline were issued in exercise of CBN’s statutory powers under section 33 (1) (b) of the Central Bank of Nigeria Act 2007.
According to the guidelines, every BA shall have an underlying trade transactions for which the bank should hold the title documents to the merchandise as collateral for the acceptance, while the document shall also be available for examiner’s scrutiny.
The publication said as BA shall be represented by a physical instrument in the form of a draft signed by the drawer and accepted by the bank and that all Bas should be properly executed by the bank by affixing its “ACCEPTED” stamp, signature and date on the face of the bill.
The Publication said, “The bank shall have a signed agreement, for each acceptance it creates, with the drawer. Subject to these guidelines, a BA may only be drawn on and accepted by a bank, pursuant to an acceptance credit line, to finance the drawer’s business-related activity in relation to the purchases from or sale of goods to another person who may be resident or non-resident, evidenced by proper and adequate documentation.
“Unless otherwise specifically provided for in these guidelines or approved by the CBN, the “sale” or “Purchase” of services shall not be eligible for BA financing.
“A bank shall not accept a BA that is drawn to finance a sale or purchase of goods where he two parties to the trade transaction are part of a single legal entity (e.g. Production department and Marketing department of one company or one branch and another branch)”
On the CP, he apex bank said a CP qualified as a financing vehicle under the guidelines if the issuer had three-year audited financial statements, with the most current not exceeding 18 months from the last financial year end as well as an approved credit line with a Nigerian bank by the issuer, acting as an issuing and payment agent, where the bank gurantees the issue.
The facility will be disbursed through participating Microfinance Institutions (MFIs), which will in turn extend the loans to their customers, particularly SMEs, as they directly interface with businesses at the grassroots level.
The Executive Director of COMCIN, Mr. Micheal Ogbaa who represented the Chairman, Dr. Iredele Oyedele (FCA, FCCA), said the initiative is designed to strengthen micro-lending institutions and expand access to finance for grassroots entrepreneurs, particularly women and youths in the informal sector.
Ogbaa explained that COMCIN does not lend directly to individuals but works through its network of microfinance and cooperative institutions, which in turn provide loans to end users.
“We came together to advocate for the microfinance ecosystem. Commercial banks often exclude people at the grassroots, but our members are positioned to reach them. This facility will empower them to do more,” he said.
He noted that the loan scheme offers low interest rates and flexible repayment plans, making it more accessible to small business owners.
According to him, about 90 percent of beneficiaries are expected to be women, who play a key role in sustaining families and driving economic activities at the local level.
“Our focus is on traders, service providers, and players in the informal sector. These are the real movers of the economy. By supporting them, we are strengthening families and contributing to national development,” he added.
Ogbaa disclosed that eligible SMEs with proven integrity and business track records could access up to N5 million each through participating micro-lending institutions. The rollout has commenced in Lagos and will extend to Abuja, Enugu, and other regions, including the South-West, South-East, and North-East.
He said 12 micro-lending institutions have already benefited from the scheme, while 85 applications are currently being processed under the pilot phase.
“Our target is to reach at least 100,000 SMEs nationwide. We are building a platform that connects funding partners with credible micro-lending institutions, creating a reliable channel for financial inclusion,” Ogbaa said.
He added that COMCIN is also working to attract larger funding pools from development finance institutions and private investors, noting that successful implementation of the pilot phase would boost confidence and unlock more capital for SMEs.
“We have seen encouraging testimonies from early beneficiaries. As we demonstrate transparency and efficiency, more institutions will be willing to channel funds through us,” he said.
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