CBN Reviews Minimum Capital Requirement For Microfinance Banks In Nigeria

Proshare

Tuesday, October 23, 2018 / 11:28 AM / CBN

 

Given the role of microfinance banks in economic growth and development, the Central Bank of Nigeria (CBN) introduced the Microfinance Policy, Regulatory and Supervisory Framework on December 15, 2005 (revised in 2011). 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, had been contending with such challenges as inadequate capital base, weak corporate governance, ineffective risk management practices, dearth of requisite capacity and mission drift. The CBN has reviewed the state of health of the sub-sector and 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 sub-sector 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:

1)         Unit Microfinance Bank                 N200,000,000 (Two hundred million Naira)

2)        State Microfinance Bank                N1,000,000,000 (One billion Naira)

3)        National Microfinance Bank          N5,000,000,000 (Five billion Naira)

 

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 of the CBN and the Development Bank of Nigeria.

The new minimum capital requirement takes immediate effect for new applications while existing microfinance banks shall be required to FULLY comply with effect from April 01, 2020.

 

Proshare Nigeria Pvt. Ltd.

 

 Proshare Nigeria Pvt. Ltd.


 

Related News

1.       Exposure Draft On The Regulation For The Operations Of Mortgage Guarantee Companies In Nigeria

2.      Exposure Draft Of New CBN Licensing Regime For Payment System Providers

3.      CBN Proposes N5bn Capital Requirement For Payment Service Banks

4.      CBN Publishes Guidelines For Licensing and Regulation of Payment Service Banks in Nigeria

5.      Natural Language Processing in Banking – Current Applications

6.      The World Federation Of Exchanges Responds To Global Financial Network (GFIN) Consultation

7.      FirstBank To Host FinTech Summit on Oct 17 - The Future of Banking – the Role of AI and Big Data

8.     Britain Can Become The Natural Global Home For Fintech

9.      Consumer Insights can Reform Digital Banking in Nigeria – Agusto and Co

10.  Fintech Association of Nigeria Kicks-off Fintech Learning Series with SEC

11.   The Big Blockchain Lie

12.  Coinbase Is Shutting Down Its Fund Aimed At Big Investors As It Pivots To A New Retail Product

13.  Crypto is the Mother of All Scams, While Blockchain Is The Most Over-Hyped Technology Ever

READ MORE:
Related News
SCROLL TO TOP