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Nairaland Forum / Nairaland / General / Business / CBN Increases The Capital Base Of Microfinance Banks (14111 Views)
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CBN Increases The Capital Base Of Microfinance Banks by Freddyjimoh: 6:20am On Nov 03, 2018 |
The Central Bank of Nigeria (CBN) has raised the minimum capital base of microfinance banks in the country giving them up to April 2020 to recapitalise. The CBN in a circular issued and signed by the director, financial Policy and Regulation department, Kevin Amugo, had increased the minimum capital base of National MFBs to N5 billion from N2 billion while that of state was increased to N1 billion from N100 million. Under the new capital base Unit license MFB which previously requires N20 million minimum paid up capital to operate will now require N200 million. The CBN said the move had become inevitable as the sector had been contending with challenges such as inadequate capital base, weak corporate governance, ineffective risk management practices, dearth of requisite capacity and mission drift. Given the role of microfinance banks in economic growth and development, the CBN introduced the Microfinance Policy, Regulatory and Supervisory Framework on December 15, 2005 (revised in 201 l). The key focus of the policy was among others, to increase financial inclusion rate in the country: improve access to financial services for the active rural poor; and pursue poverty eradication. The microfinance banking sub-sector, in pursuit of the above objectives. It said having reviewed the state of health of the industry and it is of the view that microfinance banks as presently constituted, would be unable to meet the critical targets set out in the Microfinance Policy, hence the need for specific reforms to strengthen the subsector and reposition microfinance banks towards improved performance. “Consequently, the CBN, in exercise of the powers conferred on it by the Banks and Other Financial Institutions Act and in furtherance of its mandate to promote a sound financial system in Nigeria, hereby increases the minimum capital requirement of microfinance banks as follows: - Unit Microfinance Bank N200 million, - State Microfinance Bank N1 billion, - National Microfinance Bank N5 billion. To meet these requirements, existing microfinance banks are expected to explore the possibility of mergers and acquisitions and/or direct injection of funds. The Revised Regulatory and Supervisory Guidelines for Microfinance Banks, Code of Corporate Governance for Microfinance Banks and sector specific Prudential Guidelines for Microfinance Banks would be issued in due course. “Institutions that meet the capital requirements as well as demonstrate the existence of strong corporate governance in their operations would be allowed to open account at the CBN office within their state of operation. Such institutions would also be channels for micro funding activities at the CBN and the Development Bank of Nigeria.’’ Source: Leadership Newspapers https://leadership.ng/2018/10/24/cbn-reviews-minimum-capital-base-for-microfinance-banks/ |
Re: CBN Increases The Capital Base Of Microfinance Banks by Vanityupnvanity(m): 6:41am On Nov 03, 2018 |
good step in the right direction.. |
Re: CBN Increases The Capital Base Of Microfinance Banks by Lifestone(m): 7:33am On Nov 03, 2018 |
@ N370/$1, N20million capital base means about $54,054 which is ridiculous for any deposit taking institutions. When the Mfbs were originally licensed, the exchange rate was about N100/$1 (I.e $200,000). The new directive will certainly trigger off a new round of mergers in the sector, while some will have her license withdrawn at the end. 7 Likes |
Re: CBN Increases The Capital Base Of Microfinance Banks by iammo(m): 7:33am On Nov 03, 2018 |
![]() 21 Likes |
Re: CBN Increases The Capital Base Of Microfinance Banks by YoungLionken(m): 7:34am On Nov 03, 2018 |
I just hope this is not a way of swindling funds, elections are near, too much desperation from the AP... ![]() 1 Like |
Re: CBN Increases The Capital Base Of Microfinance Banks by tkonmoney001: 7:35am On Nov 03, 2018 |
Chaiiii..... |
Re: CBN Increases The Capital Base Of Microfinance Banks by itiswellandwell: 7:36am On Nov 03, 2018 |
Wise people who have funds in micro finance banks should be vigilant and be alert or even do the needful of withdrawing their funds. 8GB Atm card flash drives for sale. Check my signature. |
Re: CBN Increases The Capital Base Of Microfinance Banks by didfy: 7:36am On Nov 03, 2018 |
Thats great. So the market women would have security 1 Like 1 Share |
Re: CBN Increases The Capital Base Of Microfinance Banks by deedy111: 7:38am On Nov 03, 2018 |
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Re: CBN Increases The Capital Base Of Microfinance Banks by LegalOpinion: 7:45am On Nov 03, 2018 |
deedy111: I hope you haven't been applying for jobs using this kind of email address? 6 Likes |
Re: CBN Increases The Capital Base Of Microfinance Banks by Henjor48(m): 7:46am On Nov 03, 2018 |
CBN indirectly said most MFBs should close shop.
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Re: CBN Increases The Capital Base Of Microfinance Banks by adecz: 7:46am On Nov 03, 2018 |
Where do they expect the MFBs to get this type of money in this harsh Economy? The macroeconomic environment is so harsh that government is moving from country to country, begging for loans and selling off national assets to keep the country afloat. These APC government is just full of clueless charlatans. Tufiakwa!!! 3 Likes |
Re: CBN Increases The Capital Base Of Microfinance Banks by kolafolabi(m): 7:50am On Nov 03, 2018 |
This is heartless and cruel from CBN.. This country has turned to something else.. ATIKU2019 2 Likes |
Re: CBN Increases The Capital Base Of Microfinance Banks by Jabioro: 7:58am On Nov 03, 2018 |
Lapo wahala |
Re: CBN Increases The Capital Base Of Microfinance Banks by PHIPEX(m): 8:05am On Nov 03, 2018 |
As difficult as it appears this a policy in the right direction. It'll stabilize the sector that's still at the risk of collapse. Merger and acquisition is the way to go. It'll drive competition and stability as was seen in the commercial bank. Having about 100 stable mfbs is better than over 4000 mushroom Mfbs. 1 Like |
Re: CBN Increases The Capital Base Of Microfinance Banks by businesslineTV(m): 8:19am On Nov 03, 2018 |
This is commendable coming from the CBN. Most of this MFB's were already drifting from their mandate, and considering the Naira/dollar exchange rate plus other forces of inflation et al the capital base was no longer sustainable and very unhealthy. The banks have till 2020 to recapitalize and so their time starts now. Commendable move once again from the CBN. Keeps the industry healthy and rural poor man's deposit safe. 1 Like |
Re: CBN Increases The Capital Base Of Microfinance Banks by Nobody: 8:19am On Nov 03, 2018 |
Cut throat |
Re: CBN Increases The Capital Base Of Microfinance Banks by idrisalomagold(m): 9:00am On Nov 03, 2018 |
Please can anyone tell me the microfinance banks? I wan to know so the ideally know where my money is. I bank with EcoBank and FirstBank. Am I save? |
Re: CBN Increases The Capital Base Of Microfinance Banks by jconsulting(f): 9:24am On Nov 03, 2018 |
Time for them to merge ,some of them are conduit pipe from siphoning funds |
Re: CBN Increases The Capital Base Of Microfinance Banks by Acidosis(m): 9:44am On Nov 03, 2018 |
Lol, coming after the CCTV documentary?? |
Re: CBN Increases The Capital Base Of Microfinance Banks by omoelerin1: 10:01am On Nov 03, 2018 |
adecz:Everything is not politics mhen. This is CBN policy. |
Re: CBN Increases The Capital Base Of Microfinance Banks by pocohantas(f): 10:05am On Nov 03, 2018 |
Anyone who thinks 200m PAID UP CAPITAL is too much for a unit MFB, must be a joker. Emphasis on PAID UP... |
Re: CBN Increases The Capital Base Of Microfinance Banks by israelmao(m): 10:31am On Nov 03, 2018 |
It is a good move to make banks stronger and making depositors have confidence in the safety of their savings. |
Re: CBN Increases The Capital Base Of Microfinance Banks by AstuteJay: 10:44am On Nov 03, 2018 |
Lifestone: |
Re: CBN Increases The Capital Base Of Microfinance Banks by debaj10: 10:44am On Nov 03, 2018 |
businesslineTV:when you have a few minutes during the week, walk into any mfb near you and ask them the pros and cons of this policy, k? promise to share the answer you get? Lifestone:who will invest in a microfinance bank, when big banks like Skye can fail just like that? ![]() iammo:hm, most of us will be shocked at the number of taxes a new firm has to pay! why on earth will a sane country have these kinds of laws?! itiswellandwell:in the short term (12/2020), is might be the safest- even only- option for depositors. in this economy, who won troway money?! abi dis won na new MMM? ![]() adecz:this even goes beyond funding the new base. when the unqualified/merged banks close, where will their customers go to access loans? how far will they travel? if the CBN failed to properly assess Skye bank which folded up last month, how will it monitor/assess thousands of microfinance banks ![]() kolafolabi:it's actually quite different from being evil- most policy makers are out of touch with the real world. the question is, who was consulted before this policy was drawn up? PHIPEX:you stabilize micro enterprise institutions by securing/guaranteeing deposits, improving monitoring, more effective operations; and other policies that draw micro enterprises to access loans near their point of business. govt keeps wailing that many people are unbanked and there's too much liquidity in the market, yet its policies are reducing access to banks, creating uncertainty and appear to be deliberately aimed at making inclusion harder. what stops the CBN from employing field assessors to monitor, advise, even market MFBs? omoelerin1:consecutively bad decisions means the politicians in power lack adequate knowledge to query such policy suggestions. why devalue your currency and still have to defend it every single day, with billions of dollars?! and yet, manufacturers still find it hard to access same dollars! ![]() its madness! |
Re: CBN Increases The Capital Base Of Microfinance Banks by FRANKOSKI(m): 10:55am On Nov 03, 2018 |
SUFFERING AND SMILING. |
Re: CBN Increases The Capital Base Of Microfinance Banks by IchBinBrait(m): 11:05am On Nov 03, 2018 |
idrisalomagold: From the word "micro" Microfinance banks (MfBs) are specifically set up to meet the needs of small and medium business enterprise owners who are unable to source for funds from commercial banks. Examples of MFBs are Lapo, Addosser, AB, ACCION, Zion, Zuru etc... As at September last year, the total licensed MFBs were about 1,003 in Nigeria. Therefore small businesses do not need to worry about funds for their business operations. Whereas commercial banks are Zenith, Ecobank, GTB, FBN, Access etc.. These ones carry out regular banking activities. Nothing is gonna happen to your money. We all have accounts with these banks. Mehn,, all these struggling MfBs will just have to merge if they still value their licenses. Marketers get ready to be employed cuz you will send bank products wella. I know what CBN have in mind. 1 Like |
Re: CBN Increases The Capital Base Of Microfinance Banks by ITbomb(m): 12:34pm On Nov 03, 2018 |
Simple truth without the grammar, dem don come too much |
Re: CBN Increases The Capital Base Of Microfinance Banks by leighcon(m): 12:40pm On Nov 03, 2018 |
Yes, you "save" your money in the bank, sure. idrisalomagold: |
Re: CBN Increases The Capital Base Of Microfinance Banks by Nobody: 12:40pm On Nov 03, 2018 |
In other words, you need to be a rich bank before you can start borrowing people money. Not a bad policy tho |
Re: CBN Increases The Capital Base Of Microfinance Banks by PHIPEX(m): 3:12pm On Nov 03, 2018 |
debaj10:All these and more were said when Soludo did same for commercial banks, looking back you can tell it worked. Solid Mfbs will effectively implement the microfinance policies and give confidence to investors and depositors. As at today most depositors fear to use most of the Mfbs because of the possibility of collapse. This policy will solve that problem and introduce professionalism in the sector. |
Re: CBN Increases The Capital Base Of Microfinance Banks by debaj10: 3:38pm On Nov 03, 2018 |
PHIPEX:ur ryt. but my point is, this is the easy and lazy way out. its harder to support these small firms than it is to simply change policy- which you should do in a growing economy, instead of in such a harsh climate. its like demanding that ur children must pass well enough to jump a class, just because u want to spend less on their education. and the excuse u give is that 'those who do it, do they have two heads?' but have u given the children the support and training they need in order to meet ur demands? |
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