• Thursday, February 22, 2024
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BusinessDay

CBN gives clean bill of health to 832 MFBs

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The Central Bank of Nigeria (CBN) on Tuesday gave a clean bill of health to all the 832 microfinance banks (MFBs) in the country, saying it is generally satisfied with their operating conditions.

There had been an earlier report that the CBN was planning to shutdown up to 600 MFBs on the basis of poor performance, but in a reaction, the apex bank said such insinuations were all false and unfounded.

Out of 832 microfinance banks, four of them are now national, 75 are state, and the remaining 753 are unit MFBs.
Out of 832 microfinance banks, four of them are now national, 75 are state, and the remaining 753 are unit MFBs.

Olufemi Fabamwo, CBN director, other financial institutions supervision department (OFISD), confirmed to BusinessDay last night that the story was untrue and that in fact rather than closing shops, some of the institutions are already upgrading their levels of operations as they meet required guidelines.

His words, “Out of 832 microfinance banks, four of them are now national, 75 are state, and the remaining 753 are unit MFBs. And it is a continuous thing because some people moved from being units to national and we upgraded them because they got the capital and met other requirements. So you can actually go from unit to state as you meet the requirements.

“We have not shut down any microfinance bank. The report is therefore not true. I can confirm to you that we are generally satisfied with the current situation of the microfinance banks”.

He explained that the situation today is that for those MFBs which are not looking to operating more than one branch, they really do not need to recapitalise except when they seek to upgrade their scope of operation.

“What people do not really understand is that only those who are seeking to have more branches, that is they want to become state microfinance banks and 75 of them have done so are mandated to recapitalise. It means that any time any of them have money and want to upgrade, it comes foreword and we will check to ensure it meets the requirements, then we will convert.

“The December deadline expired for those who are having branches of more than one and who wanted to keep those branches, so they needed to recapitalise and have N100 million to become state MFBs and retain those branches. But for those who want to remain unit and are not seeking to open more than one branch, they don’t really have to do anything”.

On whether there are state MFBs that have not met requirement and therefore face an imminent shutdown or downgrade, Fabamwo said, “No, we do not have such, they are actually upgrading, none of them that has downgraded.”

In a statement earlier from the CBN communications department, Fabamwo reaffirmed unequivocally that the CBN is generally satisfied with the state of the microfinance industry and the financial condition of the MFBs, and that the story of the imminent shut down of 600 MFBs should be ignored.

Fabamwo raised concerns that such a misinterpretation of the policy direction in the microfinance sub-sector could obviously lead to the de-marketing of microfinance banks and thus, undermine public confidence which is capable of precipitating panic withdrawals by depositors and investors in the sector.

He explained that all MFBs are examined at least once a year, while some are examined more than once, depending on the exigencies of the situation. He also disclosed that follow-up visits are made by the regulator to ensure that examiners’ recommendations are implemented and corrective actions are taken by the operators of the MFBs in order to engender stability in the microfinance space.

ONYINYE NWACHUKWU, Abuja