Categories: Business and Banking

Financial expert seeks review of microfinance banks’ framework

A financial expert, Mr Godfrey Ajayi, says a review of the Central Bank of Nigeria (CBN) microfinance banks’ framework will galvanize and strengthen the sector’s financial operations.
Ajayi, the Chief Executive of G-Consulting International Services, told the News Agency of Nigeria (NAN) in Lagos on Monday that areas for review should include capitalisation, management, supervision, customers’ protection and capacity building.

The financial expert said that the current N20 million capital base required to operate a unit microfinance bank was inadequate.
“The state microfinance bank requirement of N100 million minimum paid up capital and national microfinance bank requirement of N2 billion minimum paid up capital are better, ‘’ he said.
NAN reports that a unit microfinance bank operation is limited to a particular local government while a state microfinance bank operates within a particular state.
A national microfinance bank operates beyond a state. It can function anywhere in the country.

Ajayi appealed to the apex bank to review the capital base of unit microfinance banks for effective performance since they were closer to the people at the grassroots.
“The banks should be able to equip the more active poor and attract financially excluded citizens to their financial net,” he said.

According to him, merger of unit finance banks, which constitute about 80 per cent of microfinance institutions nationwide, will serve as catalyst for effective service delivery.
“There are few state microfinance banks in the country while national microfinance banks are less than 10 in spite over the presence of 1,000 microfinance banks in the country.

“Once they are merged, the apex body must be ready to license more operators because they constitute of about 80 per cent.
“The apex bank needs to relax the stringent rules attached to bailout funds.
“Some of the banks could not still access the N20 billion Federal Government’s micro small and medium enterprises support fund,” Ajayi said.
On management and supervision, he called for establishment of an independent regulatory body to oversee the activities of microfinance banks.

He said that Other Financial Institutions Supervision Department (OFISD) of CBN saddled with monitoring microfinance banks was already overwhelmed by other duties.
According to him, OFISD is overseeing 23 commercial banks, over 1,000 Microfinance banks and all mortgage banks, among others.
He said that setting up an independent regulator for microfinance banks would improve the banks’ efficiency.

Financial expert seeks review of microfinance banks’ framework was last modified: August 27th, 2018 by Francis Belux
Francis Belux

Published by
Francis Belux
Tags: Financial expertMicrofinance banks

Recent Posts

BREAKING: Trouble looms as National Assembly postpones Resumption

The Nigerian National Assembly has postponed its scheduled resumption. The parliament will now resume on October 9 instead of September…

32 mins ago

BREAKING: Late Ras Kimono’s wife, Efemena is Dead

Barely 3 months after the death of Reggae legend, Ras Kimono, his third and closest wife, Efemena Okedi has died.…

8 hours ago

JUST IN: Crisis looms as INEC declares Osun Elections Inconclusive (REASONS)

The Independent National Electoral Commission has declared the Osun state Gubernatorial Elections Inconclusive. The declaration was made by Joseph Fuwape,…

8 hours ago

Lalong’s SSG, commissioner resign to contest 2019 elections

Mr Rufus Bature, Secretary to Plateau State Governmentand Mr Hitler Dadi, Commissioner for Special Duties and Intergovernmental Relations, have resigned…

10 hours ago

Osun Elections: Saraki reacts to reports of Rigging, reveals what will happen

Senate President Bukola Saraki, has said that Osun State election was a test to Independent National Electoral Commission, INEC, and…

10 hours ago

Osun Elections: INEC official that tore results Confesses, reveals who sent Him

An INEC official, Alao Mutiu Kolawole, arrested for tearing results in Ayedaade local government area of Osun state, has confessed, revealing…

11 hours ago