The Central Bank of Nigeria (CBN) has extended the recapitalisation date for microfinance banks in the country and has directed the banks to meet up with half of the new capital requirement by next year.
The CBN had last year raised the capital base for MFBs, with a 2020 deadline. It had increased the minimum capital base for national MFBs to N5 billion while that of state was increased to N1 billion. Prior to the policy, the minimum capital base for national MFBs was N2 billion while state MFBs were required to have N100 million.
However, in the latest circular that was signed by the Director, Financial Policy and Regulation, Kevin Amugo, the CBN said it reviewed the capital base to aid the recapitalisation process.
Furthermore, it stated that the move was to ensure ensure continued operations of micro finance banks in the rural, unbanked and underbanked areas of the economy.
It added: “Accordingly, Unit microfinance banks shall comprise two tiers; tier 1 Unit microfinance banks, which shall operate in the urban and high density banked areas of the society; and tier 2 Unit microfinance bank, which shall operate only in the rural, unbanked or underbanked areas.”
Under the categorisation, tier 1, unit microfinance bank is to be capitalised to the tune of N200 million, while tier 2 unit micro finance bank would have a capital base of N50 million.
State microfinance banks, would have capital base of N1 billion, while National Microfinance banks are to be capitalised to the tune of N5 billion.
“To aid the process of recapitalisation, all microfinance banks shall be required to comply with the following: Tier 1 microfinance bank shall meet a N100 million capital threshold by April 2020 and N200 million by April 2021.
“Tier 2 Unit microfinance banks shall meet a N35 million capital threshold by April 2020 and N50 million by April 2021. A State microfinance bank shall increase its capitalisation to N500 million by 2020 and N1 billion by April 2021 and national microfinance bank shall hold a capital of N3.5 billion by April 2020 and N5billion by April 2021,” it added.
Source: THISDAY
