Micro Finance Banks Face Stiffer CBN Measures

In a bid to ensuring that purpose  is attained and focus is reinvigorated in the microfinance banks operations and activities, the Central Bank Bank of Nigeria has read out a riot act signalling that it will no longer be business as usual, in the operations of the Micro Finance banks.

It also advised the MFBs to adhere and comply with the Revised policy framework for the Microfinance banks before the 31^st of December, or face stiff penalties as waiver appeals and pleading for more time will not be given consideration.

Apart from the Micro Finance Banks, the Primary Mortgage Banks have also been advised to speed up their re-capitalization efforts on or before the 30^th April ,2013 or face the axe of non-performance.

The Director,  Other Financial Institution Supervision Department, CBN Mr O.A. Fabamwo stated this in two separate circulars posted in the apex bank’s website. This comes at a time when there has been calls for reforms of the microfinance and primary mortgage bank activities.

It can be recalled that Proffessor Mohammed Yunus  the Founder of the Renowned Grameen Bank last year in his lecture in Lagos decried the level of engagement and involvement of the Microfinance Banks in the Country, saying it was pathetic  and needed a more proactive step and paradigmatic shift.

In the circular to the Microfinance Bank the CBN stated “As you are well aware, all MFBs that have elected to remain Unit MFBs, as indicated in the compliance plans earlier submitted to the CBN, are required to close any existing branches/cash centres, etc, subject to prior approval of the CBN in writing and adequate notification to existing customers, who should be advised to migrate their accounts to the MFB’s Head Office, while dissenting customers should be settled”.

Analysts in Nigeria like Mr Bismark Rewane CEO of Financial Derivatives believes that the Microfinance banks should be positioned to be more strategic and innovative aiding and supporting and growth of small businesses, which are pivots to the economic growth of the Nation.

The riot act may just be a wake up call for the MFBs to step up their game, and for those that cannot meet the  Revised policy framework there is need for some mergers if  necessary like we have seen in the larger bank circles.

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