The Central Bank of Nigeria (CBN) recently announced that it will not allow 121 microfinance banks (MFBs) that received provisional operating licenses in October 2010 more time to recapitalize. CBN gave the 121 MFBs, the surviving portion of 224 MFBs that had their operating licenses revoked in October 2010, a deadline of January 31 to increase their minimum capital from NGN 10 million (USD 64,200) to NGN 20 million (USD 131,000), shutdown branches engaging in illegal activities and embrace “good” corporate governance.
In February the scrutinized banks entered negotiations with CBN in an effort to extend the deadline by six months. Unspecified industry sources report that just 30 percent of these banks have so far met the CBN requirements for complete license reinstatement, fueling speculation that CBN will accede to pressure to further extend the deadline for recapitalization despite its statements to the contrary [1].
By John Howard-Smith, Research Associate
About Central Bank of Nigeria (CBN): Central Bank of Nigeria (CBN), established in 1958, is the central banking authority of the country. 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).
[1] The Nation: “CBN won’t extend deadline for Microfinance Banks”, http://thenationonlineng.net/web3/news/30808.html
MicroCapital.org story, February 15, 2011: “MICROCAPITAL BRIEF: Microfinance Banks Ask Central Bank of Nigeria for Six More Months to Meet Tightened Licensing Requirements”, https://www.microcapital.org/microcapital-brief-microfinance-banks-ask-ce…
MicroCapital.org story, October 29, 2010: “MICROCAPITAL BRIEF: Central Bank of Nigeria (CBN) Gives Provisional Approval for 121 New Microfinance Bank (MFB) Licenses”, https://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-c…
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-r…
MicroCapital’s Microfinance Universe Profile: https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Cen…
Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/
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