By Agency Reporter

Tuesday, 26 Oct 2010

The Central Bank of Nigeria has been commended for granting provisional approval for fresh licences to 121 out of 224 microfinance banks whose licences were revoked on September 24.

Former Deputy Governor of Plateau State, Mr. Jenthro Akun, who gave the commendation on Monday in Lagos, said that the action would bring relief to the sector.

Akun told the News Agency of Nigeria that the fresh licences were indications that the apex body had better plan to ensure the survival of the sector.

He said that outright revocation of the 224 microfinance banks’ licences would have had negative effects on the economy in the long run.

“This is because microfinance banking is better positioned and equipped to channel resources most effectively to the poor,” Akun, who is also the Chairman of Eagle Microfinance Bank, Jos, said.

He advised the 121 microfinance banks to see the fresh licences as an opportunity to inculcate good corporate governance with sound risk management to remain in the industry.

“The clean up of the industry should start from within the banks. I urge them to play by the rules so as to enjoy the full benefits of this emerging industry.

“We must keep our house in order, all internal abuses and tampering with depositors’ funds must stop and too much investment in fixed assets must be watched,” Akun said.

NAN reports that sequel to the outcome of the joint target examination conducted by CBN and NDIC between January and July on 820 MFBs, the operating licences of 224 MFBs were revoked.

The 224 MFBs were said to have suffered total erosion of their capital base and dissipation of depositors’ funds resulting from high level non performing loans and insider abuse.

But on October 22, the CBN in an advertorial in some national dailies announced the granting of new licences to 121 out of the 224 microfinance banks whose licences had earlier been revoked.

The CBN said that the action was due to representations to the apex body by some MFBs that had injected fresh funds into their banks and made significant loan recovery.

Source: Punch