House Urges CBN to Suspend Deadline for Recapitalisation of Microfinance Banks

The House of Representatives has called on the
Central Bank of Nigeria (CBN) to suspend the
deadline for the planned recapitalisation
programme of microfinance banks until the
economy stabilises and is considered safe for a
new deadline to be fixed.
It also mandated the Committee on Banking and
Currency to interface with the CBN to find a
workable solution to the challenges associated with
recapitalisation of the banks in Nigeria and report
back within four weeks for further legislative action.
The resolution of the House was sequel to the
adoption of a motion moved at the plenary
yesterday by Hon. Saidu Abdullahi.
Moving the motion, Abdulahi recalled that in
October 2018, the CBN reviewed the minimum
share capital requirement of the three categories of
microfinance banks.
He said the categories of Microfinance Banks are
Unit Microfinance Banks (MFBs), from N20 million
to N200 million; state Microfinance Banks (MFBs),
from N100 Million to N1 Billion; and National MFB
from N2 billion to N5 billion.
The lawmaker noted that on March 18, 2019, the
CBN further reviewed the minimum capital
requirements for the MFBs, allowing for installment
payment and categorisation of unit microfinance
into tiers one and two.
Abdulahi explained that in the new capital
requirement guideline, tier 1 MFBs (Urban) are to
pay N200 million as a minimum capital requirement
while tier 2 (Rural) are to pay N50 million as
against the initial N20 million requirement in 2018.
He said in 2020, the CBN considered the impact of
COVID–19 pandemics on the economy and
therefore revised the timeline for compliance with
the minimum capital requirement for the banks by
a year, which would be due by the end of April
Abdulahi stressed that a survey conducted by the
National Association of Microfinance Banks
(NAMB), which indicated that out of 874 licenced
MFBs, about 612 may be negatively affected by the
recapitalisation policy because only 30 per cent of
MFBs would be able to meet the April 2021
timeline, while 70 per cent are likely to be out of
business with severe consequences for the
financial services industry.
The lawmaker expressed concern that the
microfinance banks may not be able to meet up
with the recapitalisation requirement of the CBN
within the proposed time due to the adverse effects
of the COVID–19 pandemic and other economic
Abdulahi said: “Worried that if the 612 microfinance
banks, which is equivalent to 70 per cent of the
entire Nigerian MFBs, with a workforce of about
44,800 staff, are shut down, it will aggravate
unemployment, compound the challenges of
insecurity, youth restiveness, poverty, apathy and
hopelessness across the country.
“The CBN should suspend the planned
recapitalisation programme until the economy is
stabilised and considered safe for a new deadline
to be fixed.”

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