Revoked MFB licences: Stakeholders express divergent views


By Ademola Alawiye   Tuesday, 28 Sep 2010



Experts in the microfinance sector have expressed divergent opinions on the revocation of operating licences of 224 microfinance banks by the Central Bank of Nigeria.


Some of the experts, who spoke with our correspondent on Monday, said the action by the regulatory body was necessary to save the economy from another round of financial crisis.


They said that the examination conducted on the MFBs was long overdue, noting that some of them had collapsed before the intervention by the CBN and Nigeria Deposit Insurance Corporation.


The Chief Executive Officer, Lotals Consulting, Mr. Alonge Oni, said, ”Most of the MFBs had been dead even before the CBN interceded. There was a need for the CBN to clean up the microfinance sub-sector too, so that the whole financial sector can be reformed.”


But some experts said the action would further erode the confidence in the banking sub-sector, saying that the banking sector had received enough shock already.


The Chairman, Solace Microfinance Bank Limited, Mr. Glory Abrefera, said that the CBN‘s action was supposed to be a corrective measure and not punitive.


Abrefera said, ”The CBN would have empowered the MFBs via a financial bail-out as was done for the commercial banks last year if there are technical issues. Let the apex bank give the MFBs the template of how they want the banks to be run, instead of revoking their licences.”


He noted, ”The CBN should support the strengthening and growth of the MFBs in order to mop-up the cash in the grass root into the main stream banking system, access the unbanked 65 per cent and strengthen the informal sector.”


The CBN had revoked the licences of 224 micro-finance banks, saying that 27 per cent of MFBs in the country were found to be terminally distressed and technically insolvent.


The Deputy Governor, Financial System Stability, CBN, Dr. Kingsley Moghalu, while announcing this, said, ”A significant number of the MFBs, were deficient in their understanding of the micro-finance concept and the methodology for delivery of micro-finance services to the target groups.


”Many of them lost focus and began to compete with regular commercial banks for customers and deposits, leaving their target market unattended to, in spite of efforts of the regulatory authorities to put them back on track.”


Source: The Punch



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