The Managing Director of Future Growth Microfinance Bank, Abuja, Mrs Frances Becky, on Friday advocated establishment of special arm of government to combat loan defaults in Microfinance Banks (MFBs).
Becky told the News Agency of Nigeria (NAN) in an interview in Lagos that microfinance banks’ 45.70 per cent Portfolio-At-Risk (PAR) in 2013 needed quick intervention to prevent a repeat.
She said what this means was that the Non-Performing-Loans (NPLs) held by the sub-sector was 45.70 per cent.
“This figure also put depositors’ confidence and the 220 Micro, Small and Medium Enterprises (MSME) at risk,” she said.
The managing director said that although the 2013 figure was a decline from the 61.9 per cent of 2012, the percentage was not healthy for the survival of the sector.
She stressed that the special department would adjudicate expeditiously on matters concerning loans default in the sector.
She added that if adequate measures were not put in place to tackle the menace, it could force many of the outfits to wind-up.
Becky also advocated extensive sensitisation of the sector by the regulatory bodies, especially the Central Bank of Nigeria (CBN) and the Nigerian Deposit Insurance Corporation (NDIC).
“Intensive orientation, through continuous training of clients and customers of microfinance banks by the operators should be undertaken by regulatory bodies.
“Customers need to understand the reason why loans are granted to them.
“They also need to understand the effect of non-repayment of loans to the operations and survival of microfinance banks,” she said.
She, however, said for this special department to achieve its objectives, the officials should understand the intricacies of micro-financing.
SOURCE: Daily Independent (Nigeria)
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