The Central Bank of Nigeria (CBN), the country’s central banking authority, has rescinded the licenses of 83 microfinance banks (MFBs) in the country [1]. Details on the grounds for closure of the MFBs, which took effect in December 2013, have not been announced. The Nigeria Deposit Insurance Corporation (NDIC), a quasi-independent agency of the federal government that insures deposit-taking financial institutions, has been tasked with the liquidation of the closed MFBs.
CBN also has announced that reports suggesting the shutdown of additional 600 MFBs in the country are inaccurate [2]. Some news outlets had reported that this larger group of MFBs was being closed due to their inability to comply with CBN’s regulatory framework that was revised in 2011 to establish three tiers of capitalization requirements based on the number and location of branches that MFBs operate [3].
CBN reports total assets of NGN 13.8 trillion (USD 84 billion) as of November 2013.
By Nisha Koul, Research Associate
About Central Bank of Nigeria (CBN): The Central Bank of Nigeria (CBN) was established in 1958 as Nigeria’s central banking authority. As defined by the act of parliament that created CBN, its statutory mandates are as follows: “to issue legal tender currency; to maintain external reserves; to safeguard the international value of the legal tender currency; to promote monetary stability and a sound financial system in Nigeria; and to act as banker and financial adviser to the Federal Government.” As of November 2013, CBN reports total assets of NGN 13.8 trillion (USD 84 billion).
Sources and Additional Resources:
[1] This Day Live, “CBN Revokes Licences of 83 Microfinance Banks,” http://www.thisdaylive.com/articles/cbn-revokes-licences-of-83-microfinance-banks/172008/
[2] Daily Times Nigeria, “CBN Denies Newspaper Reports On Micro-Finance Banks Closure,” http://www.dailytimes.com.ng/article/cbn-denies-newspaper-reports-micro-finance-banks-closure
[3] Punch, “600 microfinance banks face shutdown,” http://www.punchng.com/business/600-microfinance-banks-face-shutdown/
MicroCapital Story, March 12, 2013, “Central Bank of Nigeria Agrees to Extend Deadline for Smaller Microfinance Banks to Raise Capital Until December 2013,” https://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-agrees-to-extend-deadline-for-smaller-microfinance-banks-to-raise-capital-until-december-2013/
MicroCapital Story, February 19, 2013, “ Central Bank of Nigeria (CBN), National Association of Microfinance Banks to Establish Technical Committee to Address Implication of Microfinance Policy, Including Recapitalization of MFBs,” https://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-cbn-national-association-of-microfinance-banks-to-establish-technical-committee-to-address-implication-of-microfinance-policy-including-recapitalization/
MicroCapital Story, October 4, 2011, “Central Bank of Nigeria Approves New Capital Base Requirements for Microfinance Banks (MFBs), MFBs Await Capital Verification Results,” https://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-approves-new-capital-base-requirements-for-microfinance-banks-mfbs-mfbs-await-capital-verification-results/
MicroCapital Universe Profile, Central Bank of Nigeria, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Central+Bank+of+Nigeria+%28CBN%29
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