CBN Grants Provisional Approval for New Licences to 121 MFBs

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The Central Bank of Nigeria has granted provisional approval for new licences to 121 out of the 224 microfinance Banks, MFBs, whose licences were recently revoked, subject to the fulfillment of some specific requirements within three (3) months. Those granted these provisional approvals are those that had made fresh injection of capital and made significant loan recovery, as confirmed by a recent capital verification exercise. The list of the affected MFBs will be published in selected papers on Friday 22nd and Monday 25th October, 2010 respectively.
The requirements for the grant of new operating licence to the 121 MFBs include the capitalization of prior deposits for shares and the new capital injection to bring the shareholders’ fund unimpaired by losses to the prescribed minimum of N20 million, good corporate governance, sound risk management system and strong internal controls to forestall avoidable losses, closure of unapproved branches, cash centers and customer meeting points, adoption of a true microfinance model, among others. At the expiry of the three months deadline, a comprehensive pre-licencing examination and capital verification will again be conducted before the new licence will be granted to those found eligible.
In this regard, the closure of the remaining 103 MFBs will immediately be brought to conclusion by the Nigerian Deposit Insurance Corporation (NDIC) and the process of liquidation of the affected MFBs and payment of insured deposits will commence.
The CBN is also putting in place other measures to ensure that the MFBs live up to the overriding objectives of fostering financial inclusion, fighting poverty and empowering low-income and vulnerable groups. These include the review of the Microfinance Policy Framework, introduction of a new operational template to benchmark microfinance banking, capacity building to develop a critical mass of knowledge and skill, human resources as well as examining the possibility of introducing a Micro, Small and Medium Enterprise (MSME) Fund to catalyze a sustainable development of the microfinance space.
The CBN wishes to make it abundantly clear that microfinance banking is a regulated activity and only those that are prepared to play by the rules and comply with the appraisal guidelines, prudential requirements and extant laws will be allowed to remain in the field.
Signed
M. M. Abdullahi
Head, Corporate Communications
21/10/2010
 
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