The Central Bank of Nigeria (CBN) has announced that its Cash-Lite system, which established a limit of NGN 1 million (USD 6,330) on corporate cash withdrawals and deposits, does not apply to microfinance banks (MFBs) in their transactions with commercial banks because daily withdrawals by MFB customers could exceed this amount. Commercial banks were enforcing the limit on MFBs, but this was interfering with the fact that MFBs are legally “obliged to honour the withdrawal request of their customers.” Despite a report to the contrary that was cited by MicroCapital on the exemption of MFB customers from taxation on cash withdrawals and deposits, a CBN statement explicitly states that a cash withdrawal limit of NGN 150,000 (USD 951) still applies to individual MFB customers [1].
As of 2010, 24 microfinance institutions (MFIs) in Nigeria report to the US-based nonprofit Microfinance Information Exchange (MIX) aggregate loans of USD 84.4 million outstanding to 482,300 borrowers.
By Brendan Millan, Research Associate
About the Central Bank of Nigeria (CBN): CBN, established in 1958, is Nigeria’s central banking authority. As defined by the 1958 act of parliament that created CBN, its is mandated to “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 2011, CBN reports total assets of NGN 9.77 trillion (USD 61.9 billion).
Sources and Resources:
[1] Central Bank of Nigeria: “Circular on Cash Withdrawal Limit for Primary Mortgage Institutions and Microfinance banks.”, http://www.cenbank.org/OUT/2012/CIRCULARS/BSPD/CIRCULAR%20ON%20CASH%20WITHDRAWAL%20LIMIT.PDF
MicroCapital.org Article, February 6, 2012, “Microfinance Banks Exempt from Nigeria’s Cash-Lite Cashless Banking System and Tax”, https://www.microcapital.org/microcapital-brief-microfinance-banks-exempt-from-nigerias-cash-lite-cashless-banking-system-and-tax/
MicroCapital.org Article, 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.org Article, May 5, 2011, “Central Bank of Nigeria Inspecting Microfinance Institutions with Provisional Licenses, Plans to Cut Number of Microbanks ‘Drastically’”,https://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-inspecting-microfinance-institutions-with-provisional-licenses-plans-to-cut-number-of-microbanks-“drastically”/
MicroCapital.org Article, October 1, 2010, “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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