HENCEFORTH, microfinance banks that use Wema Bank as its corresponding bank would need to provide ‘tangible collateral’ to guarantee ‘third-party cheque’, BusinessWorld Intelligence can now reveal.
A letter to this effect has been sent to the concerned microfinance institutions in the country by the bank. “If tangible collateral is not provided,” the letter said “third-party cheque would no longer be honoured and such MFBs would not be able to clear its cheques.”  
BusinessWorld Intelligence can also disclose that MFIs would be compelled to use their properties, among others, to guarantee third party cheques.
However, a customer of MFB can pay in cheque into his account but MFBs are not allowed to clear the cheque on their own except it goes through their corresponding banks.                  Investigation shows that Wema Bank took this step to guide against fake cheques, bounced cheques, stolen cheques, among other frauds attributed to cheque clearance which may be to the discredit of the clearing bank.
And with illiquidity rocking the microfinance market, authoritative sources in the industry said they were not sure which MFB would collapse, hence, the collaterals collected could in the long run be converted into cash, should in case such microfinance bank go under.   
When BusinessWorld visited some of the affected MFBs last week, the management of the bank was said to have reverted the directive.
“I called Wema bank and told them I want to withdraw my bank account, if the policy cannot be reversed. After much persuasion, it was reversed, which means, I only need to provide letter of indemnity,” the source said.