By Stanley Opara

Monday, 31 Jan 2011

There are fresh worries that the three-month deadline given by the Central Bank of Nigeria to microfinance banks in Nigeria that were granted provisional licences last year, may meet some MFBs unprepared.

This, according to industry sources, may result in the revocation of licences of some of the 121 MFBs given provisional licences.

The CBN granted provisional approval for new licences to these MFBs, subject to the fulfillment of some specific requirements within three months.

Those granted provisional approvals were those that had made fresh injection of capital and made significant loan recovery, as confirmed by a recent capital verification exercise.

The Head, Corporate Affairs, CBN, Mr. Muhammed Abdullahi, who spoke to our correspondent on the telephone on Friday, said, on the grounds of the new guidelines issued by the apex bank to MFBs in the country, a reappraisal form would soon commence.

He said within the first quarter of 2011, the CBN would go round monitoring the activities of MFBs, and would ensure that there was full compliance with guidelines.

The National Chairman, National Association of Microfinance Banks, Mr. Mathias Umeh, who also spoke to our correspondent, said NAMB had been communicating with its members to ensure that what happened the previous year did not repeat itself.

“We know it is not the intention of the CBN to see more of the microfinance banks close down again. So, we are on course,” he added.

The Managing Director of a microfinance bank at Ikeja, Lagos, who would not want his name or bank’s name mentioned, said players in the industry were ensuring that things were put in the right perspective before the CBN’s assessment would commence.

He said some MFBs had devised very serious debt recovery strategies to ensure that they did not fall short of standards set by the apex bank.

The requirements for the grant of new operating licences to the 121 MFBs by the CBN included the capitalisation of prior deposits for shares and the new capital injection to bring the shareholders’ fund unimpaired by losses to the prescribed minimum of N20m, good corporate governance and sound risk management system.

Others were: strong internal controls to forestall avoidable losses, closure of unapproved branches, cash centres, customer meeting points and adoption of a true microfinance model.

The apex bank had also said, at the expiry of the three months deadline, that a comprehensive pre-licencing examination and capital verification would again be conducted before the new licence would be granted to those found eligible.

Source: Punch