CNF: Recursion in CFG
In your example the problem is in the so-called chain productions $M\to A$ and $N\to B$. Just look how these single nonterminals can finally be rewritten into terminals: $M \Rightarrow A \rightarrow a$. Remove the $M\to A$ chain production and replace it by $M\to a$.

In general, if we have any sequence of nonterminals $X_1 \Rightarrow X_2 \Rightarrow \dots X_n \Rightarrow c$ add the production $X_1\to c$. Then remove the chain productions of the grammar.

Recursion in general is not a problem. It is the essence of context-free grammars! The only requirement of Chomsky Normal Form is that productions are of the form $A \to BC$ and $A\to a$ with $A,B,C$ nonterminals (=variables) and $a$ terminal (letters).