Commentators are arguing that the Central Bank of Nigeria’s (CBN’s) proposed bank bailout program extend to distressed microfinance banks. The Central Bank of Nigeria is considering the establishment of an asset management company that would buy certain distressed loans from commercial banks at a discount with the goal of providing greater liquidity in the banking sector. This program would not extend in its current iteration to microfinance banks because only loans with identifiable collateral are eligible. Mr. Akin Oladeji, Managing Director of a local investment bank, opposes the call to bailout distressed microfinance banks because they operate in the informal sector and therefore are not fully integrated into Nigeria’s financial markets. Rather, he states that a separate government agency should be created to supervise and provide assistance to ailing microfinance banks.
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