By Elizabeth Adegbesan
THE Central Bank of Nigeria (CBN) has jerked up the minimum capital base for Micro-finance Banks (MfBs) by between 150 and 900 percent.
The capital base raise came very steep on MfBs operating State and Unit licences with 900 percent increase to N1billion from N100 million and N200 million from N20 million respectively, while those operating with National licence got 150 percent increase to N5 billion from N2 billion.
National licence MfBs are allowed to set up business offices nationwide, while State licence holders are allowed to have offices within the single state licenced and Unit licence holders operate only one office in designated location.
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In a circular to all MfBs signed by Director, Financial Policy and Regulation department, CBN, Kevin Amugo, the apex bank stated that the capital requirements of the MfBs was raised in order to curb the challenges capital adequacy facing the sector, while repositioning it to meet critical targets in the Microfinance policy.
The apex bank said it has reviewed the state of health of the sub-sector and is of the view that the MfBs, as presently constituted, would be unable to meet the critical targets set out in the Microfinance Policy, hence the need for specific reforms to strengthen the subsector and reposition the institutions towards improved performance.
Consequently, the CBN stated: “In exercise of the powers conferred by the Banks and Other Financial Institutions Act and in furtherance of its mandate to promote sound financial system in Nigeria, CBN hereby increases the minimum capital requirement of MfBs as follows: Unit MfBs ( N200 million), State MfBs ( N1 billion) and National MfBs ( N5 billion).
“The new minimum capital requirement takes immediate effect for new applications while existing MfBs shall be required fully to comply with effect from April Ist, 2020”.
Source: https://www.vanguardngr.com/2018/10/cbn-orders-astronomical-increase-in-capital-base-of-microfinance-banks/
