By Hope Moses-Ashike, Businessday –

Microfinance banks (MFBs) operators are eagerly expecting a major reform in the sub-sector after the liquidity crisis that practically brought the sector to its knee through the unprofessional attitude of most directors who ran the affairs of the banks.

Mathias Omeh, president, National Association of Microfinance Banks, pointed out that the general reform carried out by the Central Bank of Nigeria (CBN) on Deposit Money Banks (DMB) was also needed in the microfinance industry, but on a low key, considering that the sub-sector was a small entity.

Sanusi Lamido Sanusi, CBN governor, early this year revealed details of reforms intended within the banking system, saying while the US had set up a committee to undertake a study of what went wrong over there, after achieving some stability, “in our own case, we commissioned a detailed study with the involvement of the CBN and external resources to diagnose the problems and come out with solutions.” And this had culminated into the formulation of the blueprint or roadmap for the reforms.

According to Sanusi, the blueprint for reforming the Nigerian financial system in the next 10 years is built around four pillars of enhancing the quality of banks, establishing financial stability, enabling healthy financial sector evolution, and ensuring that financial sector contributes to the real economy.

Omeh admitted that the ongoing review of the microfinance policy guideline by the apex bank forms part of the total banking reform, noting that the regulatory authorities which include the CBN and Nigeria Deposit Insurance Commission (NDIC) were currently embarking on target examination of MFBs and that each bank examined was being instructed on what to do.

The CBN is currently undergoing a review of the microfinance policy guideline, and the result is expected to be released this month.

It would be recalled that the CBN last month held stakeholders’ meeting on the review of the microfinance policy, regulatory and supervisory framework, and the regulatory and supervisory guidelines for microfinance banks. BusinessDay, however, gathered that the regulatory authority was making moves to increase the share capital of MFBs to cut across the states, as MFBs in the urban areas might be expected to increase their share capital to N100 million, while those in the rural areas to N20 million.

Responding to this, Omeh said the CBN had not come out with a specified increase but that it was still consulting with stakeholders, and might come up with a new policy guideline at the end of this quarter. At a recent meeting with managers of the National Poverty Alleviation Programme, Joe Alegienu, the CBN’s director of development banking disclosed that the apex bank was developing a framework to regulate microfinance banking in the country.

Alegienu stated that the decision to create a new framework was because microfinance banking had failed in the fight against poverty, as a result of the proliferation of commercial bank operatives masquerading as microfinance operators.

The new microfinance banking policy framework is expected to become operational this month. To him, “we do not want a situation where the microfinance banks that were established to support the fight against poverty among rural people are allowed to turn into a monster that would consume the people. We will soon publish an operational template that would serve as a guide on how microfinance banks are going to do business. It is time to tell those not qualified to do the business to stay away”.