New Microfinance Policy Underway
- By Saka Khaliq
- Published September 27th, 2010
- News
- Unrated
THE Central Bank of Nigeria (CBN) is to unfold a new microfinance policy for the country, BusinessWorld Intelligence can now disclose. The new policy, when operational, will be a complete departure from the current policy that was launched in December 2005.
Dr Kingsley Muoghalu, deputy governor of CBN in charge of financial system stability (FSS), dropped the hint in Abuja at the weekend while announcing the revocation of the banking licences of 224 microfinance banks. Muoghalu who did not give further details of the proposed policy, however, hinted that the apex bank may adopt the newly introduced licencing model for conventional banks.
He announced that the 224 MFBs that failed represented 27 per cent of the 820 MFBs that were jointly examined by the apex bank and the Nigeria Deposit Insurance Corporation (NDIC). He further announced that the 224 grassroots banks were “found to be terminally distressed and technically insolvent, or had closed shop for at least six months.”
Muoghalu regretted that “a significant number of the MFBs were deficient in their understanding of the microfinance concept and the methodology for delivery of microfinance services to the target groups”. According to him, “Many of them lost focus and began to compete with deposit money banks for customers and deposits, leaving their target market unattended, in spite of efforts of the regulatory authorities to put them back on track”.
He however assured depositors of the failed MFBs that the NDIC, in line with its statutory responsibility, would pay up the maximum insurance coverage of N100, 000 per depositor.
Muoghalu disclosed that bank directors and management of the affected banks that have abused their positions would be handed over to law enforcement agencies for investigation, adding that those found culpable would be prosecuted and blacklisted accordingly.
Of the 224 microfinance banks recommended for revocation by the CBN, Lagos state accounts for 61, representing 27 per cent of the total number. They include Integrated Microfinance Bank (IMFB), MIC, Olive MFB, Hazonwa MFB, Impact MFB and Moorgate MFB.
Anambra State has 17 on the list, while Delta State occupied the third position with 14 MFIs. Ogun State has 12 MFBs, while as Rivers State has 11 MFBs affected.
In Edo State, nine of the MFBs would have their licence revoked; Abia State, eight; Oyo, eight; Osun, seven; while Abuja has three.
Mallam Sanusi Lamido Sanusi, governor of CBN, said the apex bank would take actions against the affected banks. He compared the problem of microfinance industry to that of the banking system which needs an effective government policy to thrive.
According to him, “it is not enough to set up a bank in the village, you need to have an integrated rural development policy, there has to be a business that you lend to, otherwise you simply gather peoples’ money and put it into fraud.”
He further stressed that “if you raise savings without knowing where the savings are going to be transmitted to, then you lay the foundation for financial fraud.”
Mr. Mathias Omeh, chairman, National Association of Microfinance Banks (NAMB), said the revocation is a right step in the right direction considering the abnormalities in the sub-sector.
Omeh was satisfied that the apex bank is now concerned about the development of the industry, promising the affected depositors to stay calm, as their monies would be settled by NDIC.
He appealed to customers of MFBs to stay calm and go about their normal businesses with the banks that were not affected, in order to bring the industry back to profitability.
Meanwhile, the National Association of Microfinance Banks (Namb), Abuja branch, has urged the Nigeria Police Force (NPF) to encourage its anti-fraud unit to give special attention to microfinance banks that lack the necessary resources to pursue frauds meted against them to logical conclusion.
Namb Abuja, who spoke through Mr Rogers Nwoke, its chairman, regretted the frustration being faced by its members in trying to bring fraudulent members of the public who after obtaining facilities from MFBs turn round to issue dud cheques.
Nwoke who led members of Namb executives on a visit to Mr John Haruna, FCT commissioner of Police, also called for the establishment of a special team to investigate and prosecute bank staff involved in fraud in order to achieve speed in dealing with the guilty and also serve as a deterrent to future offenders.
Dr Kingsley Muoghalu, deputy governor of CBN in charge of financial system stability (FSS), dropped the hint in Abuja at the weekend while announcing the revocation of the banking licences of 224 microfinance banks. Muoghalu who did not give further details of the proposed policy, however, hinted that the apex bank may adopt the newly introduced licencing model for conventional banks.
He announced that the 224 MFBs that failed represented 27 per cent of the 820 MFBs that were jointly examined by the apex bank and the Nigeria Deposit Insurance Corporation (NDIC). He further announced that the 224 grassroots banks were “found to be terminally distressed and technically insolvent, or had closed shop for at least six months.”
Muoghalu regretted that “a significant number of the MFBs were deficient in their understanding of the microfinance concept and the methodology for delivery of microfinance services to the target groups”. According to him, “Many of them lost focus and began to compete with deposit money banks for customers and deposits, leaving their target market unattended, in spite of efforts of the regulatory authorities to put them back on track”.
He however assured depositors of the failed MFBs that the NDIC, in line with its statutory responsibility, would pay up the maximum insurance coverage of N100, 000 per depositor.
Muoghalu disclosed that bank directors and management of the affected banks that have abused their positions would be handed over to law enforcement agencies for investigation, adding that those found culpable would be prosecuted and blacklisted accordingly.
Of the 224 microfinance banks recommended for revocation by the CBN, Lagos state accounts for 61, representing 27 per cent of the total number. They include Integrated Microfinance Bank (IMFB), MIC, Olive MFB, Hazonwa MFB, Impact MFB and Moorgate MFB.
Anambra State has 17 on the list, while Delta State occupied the third position with 14 MFIs. Ogun State has 12 MFBs, while as Rivers State has 11 MFBs affected.
In Edo State, nine of the MFBs would have their licence revoked; Abia State, eight; Oyo, eight; Osun, seven; while Abuja has three.
Mallam Sanusi Lamido Sanusi, governor of CBN, said the apex bank would take actions against the affected banks. He compared the problem of microfinance industry to that of the banking system which needs an effective government policy to thrive.
According to him, “it is not enough to set up a bank in the village, you need to have an integrated rural development policy, there has to be a business that you lend to, otherwise you simply gather peoples’ money and put it into fraud.”
He further stressed that “if you raise savings without knowing where the savings are going to be transmitted to, then you lay the foundation for financial fraud.”
Mr. Mathias Omeh, chairman, National Association of Microfinance Banks (NAMB), said the revocation is a right step in the right direction considering the abnormalities in the sub-sector.
Omeh was satisfied that the apex bank is now concerned about the development of the industry, promising the affected depositors to stay calm, as their monies would be settled by NDIC.
He appealed to customers of MFBs to stay calm and go about their normal businesses with the banks that were not affected, in order to bring the industry back to profitability.
Meanwhile, the National Association of Microfinance Banks (Namb), Abuja branch, has urged the Nigeria Police Force (NPF) to encourage its anti-fraud unit to give special attention to microfinance banks that lack the necessary resources to pursue frauds meted against them to logical conclusion.
Namb Abuja, who spoke through Mr Rogers Nwoke, its chairman, regretted the frustration being faced by its members in trying to bring fraudulent members of the public who after obtaining facilities from MFBs turn round to issue dud cheques.
Nwoke who led members of Namb executives on a visit to Mr John Haruna, FCT commissioner of Police, also called for the establishment of a special team to investigate and prosecute bank staff involved in fraud in order to achieve speed in dealing with the guilty and also serve as a deterrent to future offenders.
