By Agency Reporter

Tuesday, 14 Dec 2010

Some stakeholders in the financial sectors have urged the Central Bank of Nigeria to impose strict penalties on microfinance banks operators that fail to abide by its rules and regulations.

They said this at the just concluded Nigeria Deposit Insurance Corporation’s 2010 workshop organised by the corporation for both financial correspondents and editors between December 10 and December 11 in Bauchi.

The NDIC Deputy Director, Special Insured Institution Department, Mr. Festus Ekechi, said that CBN was in the process of reviewing the regulatory and supervisory guidelines for the microfinance banks.

He identified some of the challenges facing the sub-sector to include weak capital base, lack of corporate governance, poor managerial skills and high operating cost.

Ekechi listed others as laxity on the part of the regulators, especially in conducting checks on and reviewing the balances of the banks.

He said that a draft copy had since been presented to the stakeholders for their contributions.

Ekechi said that the revised guideline was expected to improve the supervisory and operating environment.

The NDIC Director, Research, Policy and International Relations Department, Dr. Ade Afolabi, supported Ekechi’s view, saying that the apex bank should ensure a strict licensing regime for the banks.

Afolabi said that the past liberal licensing policy had contributed to ineffective regulation, adding that unless a strict policy was designed, there would be poor quality financial service from the MFBs.

According to him, business model for MFBs requires radical review and urged the sub-sector to develop innovative products for deposit mobilisation instead of relying heavily on the money and marketing funding.

Afolabi said that acquisition of requisite skills by major stakeholders was critical to achieving economic inclusion objectives, adding: “economic inclusion remains a veritable strategy for Nigeria’s development”.

NAN reports that economic inclusion is the process of overcoming the barriers that prevent a segment of the populace from participating in the economic growth of a country of residence.

Source: Punch