A new set of rules that will moderate the activities of Micro-Finance Banks (MFBs) operating in Nigeria and strengthen the banks in playing their poverty reduction and wealth creation roles has been released by the apex Central Bank of Nigeria (CBN).
According to local media reports Thursday, the new rules are captured under the ‘Revised Regulatory and Supervisory Guidelines for Micro-Finance Banks (MFBs)’.
The revised guidelines show that any of these institutions that attain total assets of 20 million naira (US$1.25 million) or a total membership of 2,000 will be encouraged to transform to the relevant MFB.
“Collaboration between CBN, Nigeria Deposit Insurance Corporation, Securities and Exchange Commission, National Insurance Commission Corporate Affairs Commission, National Association of Microfinance Banks, Associations of Non-Bank Micro-finance Institutions in Nigeria and other relevant agencies shall be promoted to reduce arbitrage in the practice of micro-finance in the country,” the guidelines stated.
Also, they show that the authorities have taken active measures to ensure efficient and effective micro-finance delivery through the development of the appropriate framework based on the particular features and associated risks.
MFBs have been in a long-drawn battle with the CBN since the inception of the current banking reform agenda, with the apex bank insisting on removing anomalies and enforcing sanity in the sub-sector.
The MFBs, like the deposit money banks, have been enmeshed in issues of ethics, governance and exceeding of limits allowable in the enabling Acts governing their operations.
The apex bank said a retrospective analysis of the operations of MFBs in the country in the last six years showed an urgent need for the revision of the guidelines.