NEWS WIRE: Nigeria: Crackdown on Microfinance Institutions Begins

ABUJA, Nigeria, September 12 – There were indications at the weekend that the Central Bank of Nigeria (CBN) may have kicked off the review of operations of the 776 licensed microfinance banks in what economy watchers described as the second phase of banking sector reforms.

THISDAY had reported last week that owing to the mounting complaints over activities of some microfinance institutions, the regulators might sanction some operators as well as make some profound policy statements concerning their operations.

A source, however, told THISDAY that the apex bank, which summoned chief executives of the microfinance banks last week, had threatened to replace the board of any microfinance bank that is found wanting at the end of its probe.

Checks showed that some microfinance banks have initiated restructuring programmes to avoid being caught unawares by examiners from the regulatory agencies.

It was gathered that one of the first casualties of the CBN-induced restructuring was the former managing director of Integrated Microfinance Bank Limited, Mr. Simeon Akinteye, who reportedly resigned his appointment last week.

Although nobody was prepared to speak on the resignation of the former IMFB boss, sources linked his exit with the recent cash run on the bank, among other challenges. Some customers of the bank had a fortnight ago complained of their inability to access their fund.

Akinteye had told our reporter last week that the failure of the bank to meet its obligation was because many customers wanted to withdraw at the same time.

He spoke glowingly of his plan to secure the patronage of some group to take up to 60 per cent stake in the bank.

He has since been replaced by former Regional Director, Northern Operations, Mr. Danjuma Ibrahim.

In what has also been described as a prelude to the crackdown on microfinance banks, the CBN had published a disclaimer of five illegal operators. They include Almon Microfinance Bank, PS Microfinance Bank, Koffi Multipurpose Cooperative Society, Green House Microfinance Bank and Business Track Microfinance Bank.

“The CBN views the activities of these illegal operators as heinous, as their actions are capable of causing a confidence crisis.” a statement signed by Acting Director, Other Financial Institutions Department of the CBN, Mr. O Fabamwo said.

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