Recapitalisation: More MFBs May Implement Unit Status

Subsequent to the inability of some microfinance banks (MFBs) to level the recapitalisation impediment set by the Central Bank of Nigeria (CBN), some operators, THISDAY gathered, may scale down their operations to the status of Unit MFBs.

A unit Microfinance Bank is approved to operate in one location only. They are compelled to have a minimum paid-up capital of N20 million and are prohibited from having branches or cash centres. The other categories are state and national MFBs. The deadline for the recapitalisation had elapsed on December 31, 2013.

We learnt that there is an understanding between the Central Bank of Nigeria (CBN) and MFB operators that those not able to recapitalise should be downgraded.

The National President, National Association of Microfinance Banks (NAMB), Mr. Jethro Aku said: “The only circular we have was the circular that said if any Unit MFB wants to have a branch; it should recapitalise or provide N20 million and we said no.

“Unit microfinance banks at a local government level should be allowed to operate additional units or branch within that local government area and that CBN has agreed.”

He also explained that MFB’s would not face any dispute, saying that the indulgent with the central bank was for them to fit into any of the three categories.

Aku said: “So we don’t have any problem on our side, the only thing is that banks are free to inject more funds and grow at their own pace," adding that “When the deadline was shifted to 2013, we met with the CBN and arrived at this amicable understanding that the policy should be reviewed such that Unit MFBs can operate.

“If you are a Unit MFB and you want to become a State MFB or you want to have branches all over the state, it falls on you to increase the capital.”

The central bank had taken dynamic measures to ensure a proficient and effective microfinance delivery through the growth of an apt regulatory and supervisory framework, based on the peculiar features and related risks.