What are the services provided by a Finance Company in Nigeria?

What are the services provided by a Finance Company in Nigeria?

December 16, 2019

A finance companyis a specialised financial institution that supplies credit for the purchase of consumer goods and services by granting small loans directly to consumers. The Central Bank of Nigeria (CBN) is its main regulator of finance companies in Nigeria. The Central Bank of Nigeria in its revised guidelines for Finance Companies in Nigeria, has stipulated the services which a Finance Company can deliver to customers as;

  1. Consumer Loans: This includes the provision of consumer and business loans to individuals and the Micro, Small and Medium Enterprises (MSMEs).
  2. Funds Management: This entails the management of funds on behalf of customers/ clients based on agreed tenor and rate.
  3. Asset Finance: Finance lease is a lease agreement with the option of purchase by the lessee at the end of the lease period. Hire purchase involves the acquisition of goods through instalment payments over a given time frame.
  4. Project Finance: The financing of infrastructure/ industrial projects via a loan structure that relies primarily on the project’s cash flow for repayment. This covers the provision of finance for such projects promoted by small scale ventures, public/ private partnerships and concessions.
  5. Local and International Trade Finance: Local trade finance/ supply finance provides contractors and vendors with the financial support to execute local purchase orders (LPOs) and work orders for their client companies. International trade finance is designed to facilitate the export and import of goods.
  6. Debt Factoring: The business of purchasing debts/ receivables from clients at a discount and making a profit from their collection.
  7. Debt Securitization: A process by which identified pools of contractual debt/ receivables are transformed into marketable securities e.g. bonds through suitable repackaging of cash-flows that they generate.
  8. Debt Administration: Provision of debt/ loan restructuring services to clients facing cash flow problems. This involves the alteration of the terms of the debt agreement to restore liquidity to the client’s business.
  9. Financial Consultancy: Financial consultancy involves offering financial advisory services to clients for a fee and/or commission.
  10. Loan Syndication: A practice in which a Finance Company in conjunction with other finance companies and/or other financial institutions each lend a specified amount of money to a borrower at the same time and for the same purpose. The entities participating in the loan syndication cooperate with each other for the duration of the project, as individual FCs may not be able to afford the huge funds involved.
  11. Warehouse Receipt Finance: This involves a guarantee that a seller will deliver specified quantity and quality of a commodity to a certain warehouse for storage.
  12. Covered Bonds: Covered Bonds are similar in many ways to asset-backed securities created in securitization, but covered bond assets remain on the issuer’s consolidated balance sheet.
  13. Issuing of vouchers, coupons, cards and token stamps: Issuing of vouchers, coupons, cards and token stamps.

SOURCE: Central Bank Of Nigeria Revised Guidelines for Finance Companies in Nigeria.

 

618 Bees can help you quickly and easily obtain a Finance Company License from the CBN and also help you register a Finance Company with the CACB. Log on to our website www.618bees.com or email hello@618bees.com, or give us a call on +2349017190079. 618 Bees will complete your application with both the CAC and the CBN.

 

 

The information in this blog post (“post”) is provided for general informational purposes only, no information contained in this post should be construed as legal advice, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through this post without seeking the appropriate legal or professional advice from the particular facts and circumstances at issue from a lawyer. This post is protected by intellectual property law and regulations. It may however be shared using appropriate sharing tools provided that our authorship is always acknowledged and this Disclaimer Notice attached.

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    A company’s first Annual Returns are due for filing after 18 months of its inception, subsequently it should be filed annually as the name implies. The filing dates could differ for each company depending on their financial year end but must be filed not later than 42 days after its Annual General Meeting.

    The Annual Returns for Business Names is due not later than the 30th of June each year except in the year the business was registered.

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