CBN Set to Close down Ailing Microfinance Banks
- By Saka Khaliq
- Published December 21st, 2009
- News
- Unrated
As part of its sanitisation campaign in microfinance market, the Central Bank of Nigeria (CBN) will soon wind-up some microfinance banks in Lagos and other states of the federation, BusinessWorld Intelligence can now reveal.
Investigation shows that a letter to this effect has been sent by the apex bank to the affected institutions.
The CBN, in the letter, had directed the MFBs to stop receiving deposits or giving out loans for now, until either they recapitalise their banks or go into merger and acquisition to build a strong MFB.
BusinessWorld Intelligence learnt that the apex body would have published the lists of the affected institutions in the national dailies, if not for the crisis in the sub sector. Investigation shows, however, that CBN is planning to release the list of the concerned banks to the publics early next year, while banks were given till January to recapitalise or risk closure and be handed over to the Nigerian Deposits Insurance Corporation (NDIC). This reform process is causing unrest in the microfinance industry, as banks that were involved have embarked on aggressive loan recovery to at least put some liquidity in their firms.
“The list of the affected banks has been compiled and would soon be released,” a CBN source said. “We have forwarded a letter to the affected institutions to stop collecting deposits or giving out loans.” The apex bank however advised these institutions to either merge with other weak ones to have a strong MFB or merge with strong ones.
This, it was gathered, was part of discussion of the Committee of Microfinance Banks in Nigeria (Comfbin) meeting held in Lagos last week where the apex bank told the affected institutions to brace up for the challenges ahead. There are 930 microfinance banks in the country with Lagos State having 205 of these operators.
Investigation shows that a letter to this effect has been sent by the apex bank to the affected institutions.
The CBN, in the letter, had directed the MFBs to stop receiving deposits or giving out loans for now, until either they recapitalise their banks or go into merger and acquisition to build a strong MFB.
BusinessWorld Intelligence learnt that the apex body would have published the lists of the affected institutions in the national dailies, if not for the crisis in the sub sector. Investigation shows, however, that CBN is planning to release the list of the concerned banks to the publics early next year, while banks were given till January to recapitalise or risk closure and be handed over to the Nigerian Deposits Insurance Corporation (NDIC). This reform process is causing unrest in the microfinance industry, as banks that were involved have embarked on aggressive loan recovery to at least put some liquidity in their firms.
“The list of the affected banks has been compiled and would soon be released,” a CBN source said. “We have forwarded a letter to the affected institutions to stop collecting deposits or giving out loans.” The apex bank however advised these institutions to either merge with other weak ones to have a strong MFB or merge with strong ones.
This, it was gathered, was part of discussion of the Committee of Microfinance Banks in Nigeria (Comfbin) meeting held in Lagos last week where the apex bank told the affected institutions to brace up for the challenges ahead. There are 930 microfinance banks in the country with Lagos State having 205 of these operators.
