The Central Bank of Nigeria (CBN), Nigeria’s central banking authority, has approved the new capital base requirements for microfinance banks (MFBs) as per the expectations reported in the MicroCapital story dated June 28. Under the new policy, three categories of MFBs will be allowed: (1) unit MFBs that can operate in only one location; (2) state-level MFBs which will be allowed to operate in one state or the Federal Capital Territory (FCT); and (3) national level MFBs that are free to open branches in any part of the country [1]. CBN hopes this will prevent the recurrence of the disarray that led to 103 Nigerian MFBs being liquidated in 2010.
It has been reported that MFBs are generally satisfied with the new capital base requirements but are displeased that CBN has not released the results of the “capital verification” exercise that were conducted last year. MFBs failing the exercise are to lose their license to operate. Pending those results, the MFBs cannot make “any serious plans for the future,” says an unidentified manager of an MFB.
By Nisha Koul, Research Associate
About Central Bank of Nigeria (CBN): Central Bank of Nigeria (CBN), established in 1958, is Nigeria’s central banking authority. As defined by the 1958 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 July 2010, CBN reports total assets of NGN 7.37 trillion (the equivalent of USD 48.6 billion).
Sources and Additional Resources:
[1] The Moment, “Revised policy fails to excite MFBs operators,” http://www.momentng.com/en/news/4090/revised-policy-fails-to-excite-mfbs-operators-.html
MicroCapital.org story, June 28, 2011, “MICROCAPITAL BRIEF: Central Bank of Nigeria (CBN) Looking to Set New Capital Base Requirements for Microfinance Banks (MFBs),” https://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-cbn-looking-to-set-new-capital-base-requirements-for-microfinance-banks-mfbs/
MicroCapital.org story, October 1, 2010, “MICROCAPITAL BRIEF: Central Bank of Nigeria Revokes Licenses of 224 Microfinance Banks,” https://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-revokes-licenses-of-224-microfinance-banks/
MicroCapital Universe Profile: Central bank of Nigeria (CBN), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Central+Bank+of+Nigeria+%28CBN%29
Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/
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