The total assets of Nigeria’s microfinance banks, between September 2020 and September 2021, increased to N1.35 trillion from N856.3 billion.
The Central Bank of Nigeria (CBN), in a report on ‘Microfinance Banks’ Account Assets’ quarterly bulletin, stated that the number of microfinance banks rose from 876 as of June 30, 2021, to 882 as of December 31, 2021.
It would be recalled that in October 2018, the apex bank ordered Nigeria’s microfinance banks to shore up their capital.
In a circular, in which it made this disclosure, CBN argued that the financial institutions were contending with challenges such as inadequate capital base, weak corporate governance, ineffective risk management practices, dearth of requisite capacity, and mission drift.
Therefore, it urged them to consider merging, acquisitions, and direct injection of funds.
While the new capital took effect for new applications for microfinance bank licences, existing banks were given till April 2020 to meet the new requirement.
However, considering the negative impact of the COVID-19 pandemic on the economy, CBN revised the deadline for compliance with the minimum capital requirements.
The banking regulator communicated this in a circular with reference number FPR/DlR/GEN/ClR/07/054 entitled ‘Re: Review of minimum capital requirements for microfinance banks in Nigeria’.
“The Central Bank of Nigeria has extended the deadlines for compliance with the revised minimum capital requirements for all categories of the MFBs by one year as follows:
“The microfinance banks operating in rural, unbanked and under-banked areas (Tier two) shall meet the N35m capital threshold by April 2021 and N50m by April 2022.
“The microfinance banks operating in urban and high-density banked areas (Tier one) are expected to meet the NI00 million capital threshold by April 2021 and N200 million by April 2022.
“State microfinance banks shall increase their capital to N500m by April 2021 and N1bn by April 2022.
“And national MFBs are expected to meet minimum capital of N3.5bn capital by April 2021 and N5bn by April 2022,” the circular read partly.
