The Central Bank of Nigeria (CBN) has extended the deadline issued to micro finance banks (MFB) to comply with its revised minimum capital requirements for the sub-sector.
The apex bank stated this in a circular issued to all MFBs on April 29, 2020 and signed by its Director, Financial Policy and Regulation Department, Kevin Amugo.
According to the circular, “the Central Bank of Nigeria, in consideration of the impact of the coronavirus (COVID-19) pandemic on economic activities, has revised the deadlines for compliance with the minimum capital requirements for Microfinance Banks (MFBS) in Nigeria.
“Consequently, the CBN has extended the deadlines for compliance with the revised minimum capital requirements for all categories of MFBs by one year as follows: MFBs operating in rural, unbanked and underbanked areas (Tier 2), shall meet the N35 million capital threshold by April 2021 and N50 million by April 2022; MFBs operating in urban and high density banked areas (Tier 1) are expected to meet the N100 million capital threshold by April 2021 and N200 million by April 2022; State MFBs shall increase their capital to N500 million by April 2021 and N1 billion by April 2022 and National MFBs are expected to meet the minimum capital of N3.5billion by April 2021 and N5 billion by April 2022.” CBN had in October 2018 increased the capital requirements for MFBs in a bid to tackle the challenge of inadequate capital base in the subsector.
At the time, the regulator raised the minimum capital requirement for unit and state microfinance banks by 900 per cent each to N200 million and N1 billion, respectively from N20 million and N100 million, while that of national microfinance banks increased by 150 per cent to N5 billion from N2 billion.
It stated then that while the new minimum capital requirement took immediate effect for new applications, existing microfinance banks would be required to fully comply with effect from April 1, 2020. However, CBN in March last year, revised the categories of MFBs, a move, it said, was aimed at ensuring continued operations of microfinance banks in the rural, unbanked, and the underbanked areas of the economy.
It announced that Unit MFBs will comprise two tiers: Tier 1 Unit MFBs, which will operate in urban and high-density banked areas of the society and Tier 2 Unit MFBs which will operate only in rural, unbanked or underbanked areas.
CBN also stated that Tier 1 unit microfinance banks must meet a N100 million capital threshold by April 2020 and N200 million by April 2021 while Tier 2 unit microfinance banks, it said, must meet a N35 million capital threshold by April 2020 and N50 million by April 2020. – New Telegraph.
