Nigeria: CBN urged to review MFB regulatory guidelines
By Ademola Alawiye, Punch
Microfinance banks in the country have called on the Central Bank of Nigeria to review some aspects of the regulatory guidelines and policies affecting the banks.
A communiqué made available to our correspondent on Wednesday by participants at a just concluded microfinance certification programme of non-executive directors of microfinance banks also urged the CBN to extend the recapitalisation deadline to December 31, 2013.The CBN had given all microfinance banks till December 31, 2012, to comply with the revised policy framework.
According to the communiqué, extending the date will offer the banks enough time to either recapitalise or enter into mergers and acquisition.
They observed with regret the effects of protracted delay in the judicial process in cases of fraud and brazen loan defaults plaguing the subsector and how it had contributed significantly to the problems in the subsector.
According to them, the fact that the EFCC considers most of the fraud cases affecting microfinance banks to be below its threshold have emboldened perpetrators of fraud against the subsector to continue to exploit the endless adjournment in conventional courts .
The participants urged government to set up a workable judicial framework that would be time sensitive for the sub-sector.
The communiqué read in part, “There should be further review of some aspects of the regulatory guidelines and policies as follows; sanctions for infringements regarding submission of monthly returns, annual reports etc to be reviewed downward for microfinance banks and to be imposed only after enough warnings have been given, corporate tax for microfinance banks to be reduced to 20 per cent officially with special additional concessions because of the social nature of the business, and single obligor for microfinance banks to be increased to five per cent and 10 per cent for individual and corporate borrowers respectively.”
The participants applauded the establishment of the National Microfinance Consultative Committee, saying that there should be strong representation of microfinance operators on the committee.
They said CBN should promote the enactment of a personal securities registration law for personal chattels and movable assets to enhance the securitisation of microfinance bank loans, which were usually secured by personal and movable assets.
They added that CBN should promote the enactment of an effective personal bankruptcy and business rescue laws for individuals as most microfinance bank customers were individuals and not companies.