Microfinance banks seek extension of recapitalisation deadline

ADVERTISEMENT

Microfinance banks in Nigeria will not be able to meet up with recapitalisation requirement of the Central Bank of Nigeria, within the proposed time, because of the effect of the coronavirus pandemic on the economy, an official has said.

Yusuf Gyallesu, National President of the National Association of Microfinance Banks (NAMB), said this, according to BusinessDay newsaper.

Mr Gyallesu sought the CBN to reconsider its minimum capital requirement for the banks, and called on the top bank to extend the deadline for compliance.

The CBN had in March 2019 reviewed the requirements with a view to ensuring continued operations of microfinance banks in rural, unbanked and underbanked areas of the economy.

After the review, the minimum share capital for MFBs, as of April 2021, ranged from N35 million to N3.5 billion, depending on the category.

Mr Gyallesu said the microfinance banks had challenges raising the capital.

“We are advocating through different sources to see how the CBN can shift ground by reducing the capital requirement amount or extending the tenure of the deadline,” he was quoted by BusinessDay. as saying.

“So within this COVID-19 period, where can one go to raise 1, 000 percent of the reviewed capital” he was quoted as saying.

The apex bank had earlier extended the deadlines issued to the banks to comply with its revised minimum capital requirements.

In the circular, the apex bank said: “The Central Bank of Nigeria in consideration of the impact of the coronavirus (COVID-19) pandemic on economic activities has revised the deadlines for compliance with the minimum capital requirements for Microfinance Banks (MFBS) in Nigeria.”

Consequently, the CBN said MFBs operating in rural, unbanked and underbanked areas (Tier 2) should meet the N35 million capital threshold by April 2021 and N50 million by April 2022.

It added that MFBs operating in urban and high density banked areas (Tier 1) are expected to meet the N100 million capital threshold by April 2021 and N200 million by April 2022.

State MFBs were asked to increase their capital to N500 million by April 2021 and N1 billion by April 2022.

Similarly, national MFBs were expected to meet the minimum capital of N3.5 by April 2021 and N5 billion by April 2022.

But acording to an internal survey conducted by the National Association of Microfinance Banks (NAMB), only 30 percent of MFBs will be able to meet the deadline.

Support PREMIUM TIMES’ journalism of integrity and credibility

Good journalism costs a lot of money. Yet only good journalism can ensure the possibility of a good society, an accountable democracy, and a transparent government.

For continued free access to the best investigative journalism in the country we ask you to consider making a modest support to this noble endeavour.

By contributing to PREMIUM TIMES, you are helping to sustain a journalism of relevance and ensuring it remains free and available to all.

Donate


TEXT AD: To advertise here . Call Willie +2347088095401…