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CBN to axe 77 microfinance banks for non-compliance
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The axe is dangling precariously on 77 microfinance banks in Nigeria following their refusal to render their statutory returns to the regulatory authorities.
The Central Bank of Nigeria (CBN) last week said it would sanction microfinance banks that fail to render their monthly returns to the CBN and the Nigeria Deposit Insurance Corporation (NDIC) by the end of this month.
BusinessDay investigation revealed that as at February 2008, only 582 out of 659 microfinance banks have so far rendered their statutory monthly returns.
Olufemi Fabamwo, Deputy Director, Other Financial Institution Department of the CBN, who confirmed this in a telephone interview with BusinessDay at the weekend, however explained that due to the high level of compliance from the Microfinance Banks, the CBN has decided to give the 77 defaulting MFBs “verbal warning” after which stringent sanctions would be imposed on them.
“As at February this year, we have 77 out of about 659 microfinance banks that have not rendered their statutory monthly returns. Due to the high level of compliance recorded so far, we are giving them verbal warning first.
However, we have various degrees of sanctions which would be imposed on defaulting microfinance banks if they become recalcitrant”
All MFBs in Nigeria are statutorily required to submit monthly returns to reach the directors, other financial institutions department of the CBN and the director, special insured institutions department of the NDIC, not later than 10 working days after the end of each month Similarly, audited financial statements and abridged version should be submitted for CBN approval not later than four months after the end of the financial year.
Some Managing Directors/Chief Executive Officers leading micro finance banks in Lagos, who spoke to BusinessDay last weekend on the basis of anonimity, said that the CBN and NDIC should give MFBs more time to settle down to business before compliance could be enforced.
“The NDIC is complaining that most micro finance banks are not remitting their monthly returns as at when due without considering the fact that most MFBs are yet to settle down for serious business. Moreover, the sector is still new. Some MFBs have not even operated up to six months .The implication of this is that we need to be given more time.” the source noted.
Another Chief Executive Officer of a newly licensed Micro finance bank who craved anonymity, also said that it was too early for NDIC to expect significant level of compliance from MFBs.
Said he “I believe it is too early for NDIC to expect MFBs to immediately comply with respect to statutory rendition. Look at the issue of premium rate, the NDIC has increased the insured amount from N50,000 to N100,000.
There is no standard premium for all the MFBs. From the position of NDIC, the higher the risk of any MFB, the higher the rate and vice versa. I support that MFBs should be adequately covered in order to instil public confidence in the system. The earlier MFBs do it, the better for sector. However, if the CBN and NDIC can give us more time, that will be wonderful.”
The Central Bank of Nigeria (CBN) last week said it would sanction microfinance banks that fail to render their monthly returns to the CBN and the Nigeria Deposit Insurance Corporation (NDIC) by the end of this month.
BusinessDay investigation revealed that as at February 2008, only 582 out of 659 microfinance banks have so far rendered their statutory monthly returns.
Olufemi Fabamwo, Deputy Director, Other Financial Institution Department of the CBN, who confirmed this in a telephone interview with BusinessDay at the weekend, however explained that due to the high level of compliance from the Microfinance Banks, the CBN has decided to give the 77 defaulting MFBs “verbal warning” after which stringent sanctions would be imposed on them.
“As at February this year, we have 77 out of about 659 microfinance banks that have not rendered their statutory monthly returns. Due to the high level of compliance recorded so far, we are giving them verbal warning first.
However, we have various degrees of sanctions which would be imposed on defaulting microfinance banks if they become recalcitrant”
All MFBs in Nigeria are statutorily required to submit monthly returns to reach the directors, other financial institutions department of the CBN and the director, special insured institutions department of the NDIC, not later than 10 working days after the end of each month Similarly, audited financial statements and abridged version should be submitted for CBN approval not later than four months after the end of the financial year.
Some Managing Directors/Chief Executive Officers leading micro finance banks in Lagos, who spoke to BusinessDay last weekend on the basis of anonimity, said that the CBN and NDIC should give MFBs more time to settle down to business before compliance could be enforced.
“The NDIC is complaining that most micro finance banks are not remitting their monthly returns as at when due without considering the fact that most MFBs are yet to settle down for serious business. Moreover, the sector is still new. Some MFBs have not even operated up to six months .The implication of this is that we need to be given more time.” the source noted.
Another Chief Executive Officer of a newly licensed Micro finance bank who craved anonymity, also said that it was too early for NDIC to expect significant level of compliance from MFBs.
Said he “I believe it is too early for NDIC to expect MFBs to immediately comply with respect to statutory rendition. Look at the issue of premium rate, the NDIC has increased the insured amount from N50,000 to N100,000.
There is no standard premium for all the MFBs. From the position of NDIC, the higher the risk of any MFB, the higher the rate and vice versa. I support that MFBs should be adequately covered in order to instil public confidence in the system. The earlier MFBs do it, the better for sector. However, if the CBN and NDIC can give us more time, that will be wonderful.”
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