Microfinance Banks Get Bail-out Fund
- By Saka Khaliq
- Published August 8th, 2011
- News
- Unrated
Facts emerged over the weekend that a bail-out fund to rescue microfinance houses in the microfinance industry has been established.
BusinessWorld Intelligence can now reveal that the fund is expected to provide short term liquidity for microfinance banks so as to avoid liquidity shocks.
The initiative known as ‘NambLag Trust Fund’, will also act as a lender of last resort to operators in microfinance market. The scheme, which is being championed by National Association of Microfinance Banks (Namb), Lagos State chapter, is expected to kick-off with N200 million initial capital, while there are plans to increase the capital base as time progresses.
Investigations showed that individual bank can only assess N500, 000 with a plan to increase this limit soon. The fund will be managed by the board of governors, Asset Management Company of Nigeria (Amcon) who will act as the fund manager, as well as deposit money bank that is expected to be the fund custodian.
While modalities for accessing it by MFBs will be drawn up by the executive committee, trust fund manager and trust fund custodian, investigations showed that the benefiting microfinance houses will pay between three to five per cent above the treasury bills rate on the facility sought for.
BusinessWorld Intelligence also revealed that MFBs, government agencies, donor agencies, deposit money banks, institutional investors, NGOs and individuals are allowed to contribute to the pool. Members (MFBs) are going to contribute N100 million, while custodian of the credit which is deposit money bank, is also expected to contribute N100 million to make it up to N200 million.
Further investigation reveals that this scheme will, in the future, provide financing and refinancing facilities for the purpose of ensuring steady liquidity for MFBs, as well as provide long term debenture and equity capital to banks in the long term.
However, findings showed that the initial capital will be increased to tens of billions of naira in the near future.
Speaking on this development, Mr. Olufemi Babajide, chairman, Namb, Lagos chapter, said the reluctance of both the Central Bank of Nigeria (CBN) and the federal government to float a rescue for operators necessitated the launch.
According to him, “since we (MFBs) could not get fund from either CBN or the government, we decided to rescue ourselves. This initiative is not restricted to banks in Lagos alone, as others from outside the state can benefit from the scheme. If something like this were to be in existence in the past, most of the liquidated MFBs will have survived.”
To assess the fund, he said the intending beneficiary should notify the management, adding that within a short time, it will be provided.
“What you need to do is to notify the authority of the fund and within the short time, you can assess it,” he said.
BusinessWorld Intelligence can now reveal that the fund is expected to provide short term liquidity for microfinance banks so as to avoid liquidity shocks.
The initiative known as ‘NambLag Trust Fund’, will also act as a lender of last resort to operators in microfinance market. The scheme, which is being championed by National Association of Microfinance Banks (Namb), Lagos State chapter, is expected to kick-off with N200 million initial capital, while there are plans to increase the capital base as time progresses.
Investigations showed that individual bank can only assess N500, 000 with a plan to increase this limit soon. The fund will be managed by the board of governors, Asset Management Company of Nigeria (Amcon) who will act as the fund manager, as well as deposit money bank that is expected to be the fund custodian.
While modalities for accessing it by MFBs will be drawn up by the executive committee, trust fund manager and trust fund custodian, investigations showed that the benefiting microfinance houses will pay between three to five per cent above the treasury bills rate on the facility sought for.
BusinessWorld Intelligence also revealed that MFBs, government agencies, donor agencies, deposit money banks, institutional investors, NGOs and individuals are allowed to contribute to the pool. Members (MFBs) are going to contribute N100 million, while custodian of the credit which is deposit money bank, is also expected to contribute N100 million to make it up to N200 million.
Further investigation reveals that this scheme will, in the future, provide financing and refinancing facilities for the purpose of ensuring steady liquidity for MFBs, as well as provide long term debenture and equity capital to banks in the long term.
However, findings showed that the initial capital will be increased to tens of billions of naira in the near future.
Speaking on this development, Mr. Olufemi Babajide, chairman, Namb, Lagos chapter, said the reluctance of both the Central Bank of Nigeria (CBN) and the federal government to float a rescue for operators necessitated the launch.
According to him, “since we (MFBs) could not get fund from either CBN or the government, we decided to rescue ourselves. This initiative is not restricted to banks in Lagos alone, as others from outside the state can benefit from the scheme. If something like this were to be in existence in the past, most of the liquidated MFBs will have survived.”
To assess the fund, he said the intending beneficiary should notify the management, adding that within a short time, it will be provided.
“What you need to do is to notify the authority of the fund and within the short time, you can assess it,” he said.
