CBN releases draft disclosure requirements for NFIs

The Central Bank of Nigeria (CBN) has released the disclosure requirements for Non-Interest Financial Institutions. These are banks and other financial institutions under the regulatory purview of the Central Bank of Nigeria that provide banking and other financial services on the basis of Islamic Commercial Jurisprudence.

Here are highlights of the guidelines

Non-Interest Financial Institutions (NIFIs) shall have a formal disclosure policy approved by the board of directors that addresses the NIFIs’ approach for determining what disclosures it will make and the internal controls over the disclosure process.
In addition, NIFIs shall implement a process for assessing the appropriateness of their disclosures, including validation and frequency.
For NIFIs that adopt internal systems to calculate capital requirements for credit, market, and operational risks and for those using credit risk mitigation techniques, compliance with specific disclosure requirements (Disclosure Eligibility Requirements) shall be a necessary condition for the recognition of such approach and the effects of such techniques for regulatory capital purposes.
NIFIs may omit the disclosure of information that is not considered material, with the exception of information that represents a disclosure eligibility requirement.
In exceptional cases, NIFIs may omit the disclosure of proprietary or confidential information (including information that represents a disclosure eligibility requirement), provided that they specify the information that is not disclosed and the reasons for non-disclosure and publish more general information on the matter in question.
Disclosures shall be published on a bi-annual basis and within thirty days of publishing the financial statements. However, for NIFIs with stable Composite Risk Rating (CRR) of “Low” and “Moderate” other than domestic systemically important NIFIs, annual reporting will be acceptable.
Domestic systemically important NIFIs may be required to publish information on a more frequent basis in recognition of their level of business, international affiliations, and financial sectors dynamics.
NIFIs shall adopt suitable organisational arrangements to ensure the compliance with disclosure requirement under this Guidance Notes. Board and management shall independently assess and verify the quality of information. The solutions adopted shall form part of the NIFI’s system of internal controls.
Conventional banks shall disclose the Window arrangement adopted whether branch or a dedicated unit.
All relevant disclosure requirements for NIFI under this standard also apply to the Window.
Conventional banks shall provide a complete set of financial statements with notes for an Islamic Window.
Conventional banks shall disclose information on the appropriate mechanism established to provide Shari`ah oversight of the activities of an Islamic Window.
Conventional banks shall disclose their holdings in Sukuk if any.

DOWNLOAD CBN DRAFT DISCLOSURE GUIDELINES FOR NFIS