Posts Tagged ‘cbn’
Posted on July 19, 2010 - by M. Bennett
Nigeria: Appropriate penalties will tighten loose ends in MFBs’ operation, CBN…
By Amaka Agwuegbo
The recent examination of microfinance banks (MFBs) by the Central Bank of Nigeria (CBN) and Nigeria Deposit Insurance Corporation (NDIC) has revealed some irregularities and unethical practices in the MFB sub-sector.
It would be recalled that, following signs of distress in some MFBs and growing complaints of fraudulent practices leveled against some operators, the CBN and NDIC had conducted target examination of the banks. This was done to ascertain the true financial health of the banks so as to separate healthy MFBs from the pack.
Posted on September 23, 2009 - by boris
Investigation on microfinance banks and loan…
High interest charged by the microfinance banks has been discovered to be the reason behind the alarming default. A microfinance loan is a facility granted by a microfinance bank to an individual or a group of borrowers, whose principal source of income is derived from business activities involving the production or sale of goods and services.
The maximum principal amount stipulated by the Central Bank of Nigeria (CBN) guidelines that a microfinance bank can grant to a client is N500,000 and this may be reviewed from time to time by the apex bank.
Microfinance loans may require joint and several guarantees of one or more persons. The repayment may be on a daily, weekly, or monthly basis in accordance with amortisation schedule in the loan contract.
Source: http://www.ngrguardiannews.com/moneywatch/article02/indexn2_html?pdate=230909&ptitle=Microfinance%20banks%20and%20loan%20default
Posted on June 18, 2009 - by Gavin
Nigeria: MFBs Cautioned Against Branch Expansion…
All Africa.com
The Chairman, Lagos State Association of Microfinance Banks, Chief. D. O. Adenekan, has warned microfinance bank operators against the risk of embarking on hasty branch expansion programme so as to avoid over-capitalizing and over-stretching their facilities.
In recent times, some microfinance bank operators have called on the Central Bank of Nigeria (CBN) to review the operational guidelines of the microfinance banks, especially the organic growth, saying the present guideline inhibits the growth of microfinance banks.
But in an interview with Vanguard, Adenekan noted that the present guidelines on the organic growth of microfinance banks is designed to ensure that they don’t over-stretch and over-expand themselves by over-capitalising.
“Our mission as microfinance banks is to grow the country from the bottom and to develop the ‘active poor’ to become ‘active rich’. Since that is the only way the country can gain from us as microfinance banks hence the the CBN stipulated that we should grow organically.” (more…)
Posted on June 18, 2009 - by Gavin
CreditRegistry obtains CBN approval-in-principle…
Business Day Online
CR Services plc (CreditRegistry), the pioneer and only fully operational credit bureau in Nigeria, has announced that it has obtained Approval-in-Principle (AIP) from the CBN to provide credit bureau services in Nigeria. Since inception in January 2003, CreditRegistry’s focus has been on bringing great value to Nigerian financial institutions, retailers and consumers through the innovative application of advanced technologies. With over six years experience in the Nigerian market, CreditRegistry has gained deep insight into the peculiarities of lending in Nigeria.
Today, CreditRegistry remains the first and only credit bureau in the world to integrate biometric technologies into a credit bureau system, providing anti-fraud capabilities to its subscribers. The company provides the most secure, cost-effective and innovative credit bureau solutions to help Nigerian creditors expand credit opportunities to borrowers, while simultaneously preventing fraud.
With a database of over 1 million credit records, CreditRegistry subscribers different itself from competition by incorporating credit bureau information into lending processes to manage risk, reduce fraud and increase profits. (more…)
Posted on June 15, 2009 - by Gavin
How interest rate ‘capping’ affects MFBs’ lending drive…
Business Day
It is only natural for low- income earners, most of whom patronise microfinance banks, to expect cheap credit from the micro-finance operators, especially with the Central Bank of Nigeria (CBN) pegging of lending and deposit rates at 22 and 15 percent per annum, respectively. From every indication, that anticipation may just be dashed since microfinance banks sometimes source funds at ‘capped rates,’ for which reason they lend to borrowers at higher rates.
But majorly, since the United Nations, including its agencies like the World Bank and other non-governmental organisations (NGOs) give grant to microfinance banks, there should therefore not be any linkage between the capped rates and microfinance lending.
Nonetheless, in the estimation of Edna Ishaya, director, Enhancing Financial Innovation and Access (EFInA), a non-profit organisation funded by DFID and Ford Foundation, the interest rate capping announcement did not differentiate between commercial and microfinance banks; thus, some naïve MFBs customers expect to receive loans at 22 percent.
“It affects MFBs negatively. When customers hear it, they don’t know whether it is for commercial banks or MFBs. They think it is for everybody, so they expect their microfinance banks to lend to them at 22 percent,” she observes. (more…)
Posted on June 8, 2009 - by Gavin
How realistic is agricultural fund for MFBs?…
Business Day Online
Going by the much toutedFederal Government’s assertion that it is committed to poverty alleviation in the nation, it is expected that it would lose no time in approving the much-hyped N200 billion subsidy to small-scale-farmers, through microfinance banks. Evidently, such a move becomes necessary because the majority of basic foodstuff in the country is produced by small-scale-farmers. Besides, microfinance banks are primarily set up to provide financial services to the active poor, who are traditionally not served by the conventional financial institutions.
According to Olutayo Adenekan, chairman, National Association of Micro Finance Banks (MFBs) Lagos, small-scale farmers in the rural areas are closer to microfinance banks, whose supervisory act of ensuring loan recovery will result in high agricultural output.
However, that dream may not see the light of day so soon since government, two months ago, approved that the Central Bank of Nigeria (CBN) disburse a N200 billion agricultural fund to commercial farmers at 9 percent interest rate through commercial banks. This begs the question: If the fund is to be disbursed by commercial banks, where then is the agricultural fund for MFBs? (more…)
Posted on June 3, 2009 - by Gavin
PMFB Wants FG To Channel N200bn Agric Fund Through MFBs…
Leadership Nigeria
The Managing Director of Peace Microfinance Bank Limited, Mr. Innocent Ukasoanya, yesterday advised the Federal Government to channel part of the N200 billion agricultural credit fund through the 840 licensed microfinance banks in the country.
Ukasoanya barred his mind at a press conference organised to mark one year anniversary of the fast-growing microfinance bank. He argued that the call became pertinent “because the operations of the microfinance banks are attuned to the small and peasant farmers more than those of the big banks”.
According to him, the big banks are more like ’sharks that cannot swim in shallow waters’, unlike the microfinance banks that understand the nuances and handicaps of the small farmers.
Ukasoanya also revealed that the bank has applied to the Central Bank of Nigeria (CBN) for conversion from unit to state microfinance bank, adding that when that is done, it hopes to establish branches in all the senatorial districts of the country.
Posted on April 1, 2009 - by Gavin
Nigeria: Royal Exchange Operates Microfinance Bank…
All Africa.com
Royal Exchange Assurance Nigeria Plc has been granted approval-in-principle by the Central Bank of Nigeria (CBN) to operate a microfinance bank in the country, a move that is expected to deepen access to financial services by the informal and under-banked segments of the economy.
Having satisfied all the statutory requirements for the opening of a microfinance bank, Royal Exchange was granted approval by the CBN recently and is currently making elaborate preparations towards a commencement of operations in the next few months.
The new venture, the first by an insurance company in the country, says Allan Walmsley, the company’s Group Managing Director, is in line with the company’s mission of evolving into one of the leading financial services firms in the world over the next few years.
According to Walmsley, the vision of the Royal Exchange Group is to become a world class operator by 2012. “That vision has seen us strategically restructure our operations while a comprehensive and integrated rebranding project also is currently underway.” (more…)
Posted on March 30, 2009 - by Gavin
How the coming of credit bureaux will enhance operations of MFBs…
Business Day
The problems associated with borrowing from microfinance banks (MFBs) by individuals and the cost of operations of the banks will soon be a thing of the past with the coming on board of credit bureaux in the Nigerian financial institutions. Since MFBs grant loan to financially active poor without collateral, it is possible for individuals who consider themselves smart to take loan from different banks with different information. This was typical of what led to the first banking distress in the early nineties, which witnessed the collapse of some banks.
Mercifully, this ugly incident may not have a second chance in both commercial and microfinance bank industry with the credit bureaux. Credit bureaux is a company that engages in collation of data on individual credibility rating, which is to be shared with financial institutions who might want to lend money to them as borrowers, or to organisation who also might want to employ them. The Central Bank of Nigeria (CBN) recently granted the first Approval-in Principle (AIP) to XDS Credit Bureaux Limited, to operate as the first watchdog on the nation’s borrowers. Some microfinance banks operators see this as a welcome development, maintaining that it will add value to the risk management of MFBs. (more…)
Posted on March 26, 2009 - by Gavin
MICROCAPITAL STORY: Royal Exchange PLC Gets Approval from Central Bank of Nigeria for Microfinance Bank…
Microcapital
Royal Exchange Plc, a Nigerian insurance company, has received approval from the Central Bank of Nigeria (CBN) to operate a microfinance bank according to a report on Nigeria’s Business Day Online. Having satisfied all statutory requirements for opening a microfinance bank, Royal Exchange is currently making preparations to begin operations in the next few months. The new venture is in line with the company’s mission to evolve into one of the leading financial service firms in the world. According to Royal Exchange Group Managing Director Allan Walmsley, “That vision has seen us strategically restructure our operations while a comprehensive and integrated rebranding project also is currently underway.” Other components of this vision include technology upgrades, human capital development, risk management, product enhancement and diversification. Walmsley also stated that the company envisions “a number of strategic acquisitions to assure our future in the non-banking, financial services industry.”
Royal Exchange intends to capitalize on its 90 years of experience in financial services to help ensure the new microfinance bank quickly attains market leadership, for example by implementing the latest technologies at its new venture, such as real time online banking. Royal Exchange is quoted on the Lagos Stock Exchange, as of March 25, 2009 the company had a market capitalization of approximately USD 50 million. According to the latest company release, as of September 30, 2008 Royal Exchange reported gross premiums of USD 7.4 million. (more…)
Posted on March 25, 2009 - by Gavin
Royal Exchange gets approval of CBN to operate microfinance bank…
Business Day
Pioneer underwriting firm, Royal Exchange plc, has been granted approval-in-principle by the Central Bank of Nigeria (CBN) to operate a microfinance bank in the country, a move that is expected to deepen access to financial services by the informal and under-banked segments of the economy. Having satisfied all the statutory requirements for the opening of a microfinance bank, Royal Exchange was granted approval by the CBN recently and is currently making elaborate preparations towards a commencement of operations in the next few months.
The new venture, the first by an insurance company in the country, according to Allan Walmsley, the company’s Group Managing Director, is in line with the company’s mission of evolving into one of the leading financial services firms in the world over the next few years.
According to Walmsley, the vision of the Group is to become a world-class operator by 2012. “That vision has seen us strategically restructure our operations while a comprehensive and integrated rebranding project also is currently underway.” (more…)
Posted on March 25, 2009 - by Gavin
Nigeria: Kaduna Embraces Microfinance Policy…
All Africa.com
The micro finance policy of the federal government is already bearing fruits in Kaduna State as the 18 community banks have already converted to Micro Finance banks and as at January this year, 23 of such banks have either been licensed or given Approval s-in-Principle by the Central Bank to operate.
This was disclosed by Alhaji Mohammed Ibrahim Gusau, the Kaduna Branch Controller of the Central Bank of Nigeria (CBN) on Saturday night, at the 2008 annual dinner of Bankers’ Clearing House Committee which was held at Hamdala Hotel Kaduna.
According to him, the state government has inaugurated the Kaduna state microfinance policy implementation since 2006, “primary to ensure the transformation of the then community banks to microfinance banks,” adding that since then, the terrain for micro financing in the state has changed for the better. The Branch controller of CBN however said that the spread of such microfinance banks is not enough to cover the entire state. He then called on wealthy individuals, community leaders, non governmental organisations and other interested parties to establish more microfinance banks in Kaduna state because the government has created the enabling environment for them to thrive. (more…)
Posted on March 20, 2009 - by Gavin
Naira sustains upward swing on CBN’s intervention…
Business Day
In what may be termed as a decisive bid to consolidate its upward swing in the forex market, the Naira, yesterday, sustained its gaining streak against other foreign currencies, particularly the United States dollar.
The nation’s currency exchanged between N169 to N178/$1 as against Wednesday’s exchange rate of between N170 to N180/$1 at the parallel market while some bureau de change (BDCs) which were out of stock on Wednesday quoted N156 to N169/$1, confirming the efficacy of the Central Bank of Nigeria’s (CBN) reform package.
Although details of the recent auctions at the Retail Dutch Auction (RDAS) were not available as at last night, BusinessDay gathered that banks and their bureau de change (BDCs) were allocated some dollars.
For instance, it was gathered that all the banks participated at the March 16, auction, where $200 million was offered against the $75 million that was sold at the official rate of N146.95/$1.
Most of the parallel market operators, yesterday, acknowledged the effectiveness of the new reforms which they claimed may have led to the offloading of stocks by the operators in anticipation of bad market, which they are experiencing now.
Chukwuma Soludo, CBN governor had stated on Wednesday at a briefing in Abuja, that part of the new reforms “will actually make sure that most of the legitimate transactions for foreign exchange; be it for payment of school fees, mortgages abroad, medical purposes, businesses, or personal travel allowances; clients can now go to their banks for them.” (more…)
Posted on March 9, 2009 - by Gavin
MICROCAPITAL STORY: Nigerian Microfinance Banks Struggle to Meet their Expected Goals…
Microcapital
The Nigerian microfinance sector is facing a setback in the wake of several issues plaguing the country’s microfinance institutions (MFIs), according to a press release on the Nigerian weekly NEXT.
NEXT is a publication of Timbuktu Media, a media and information company based in Lagos, Nigeria, and founded by Dele Olojede, Africa’s first winner of the Pulitzer Prize (for International Reporting). Stating that the country’s microfinance sector has been ‘caught’ in the midst of an ‘inefficient Nigerian economic system’, the release cites several reasons why MFIs in Nigeria are not in alignment with their goal of increasing financial access to the poor.
A significant percentage of licensed MFIs in Nigeria are located and operate in well-developed cities. The location of MFIs in the urban areas impedes access of microfinance services to the rural poor. In this regard, the release quotes an analyst working with one of the MFIs in Nigeria as saying the location of these banks was the ‘first sign that hopes for [its] transformation of Nigeria’s banking landscape are misplaced’.
Additionally, since most MFIs in Nigeria have failed to capture their target markets (the poor), they have begun competing with wholly commercial banks. The release quoted the analyst as saying several operators of microfinance banks wanted a ‘short cut’ to owning a commercial bank without having to undergo the ‘rigors’ of procuring necessary banking licenses, etc. (more…)
Posted on March 3, 2009 - by Gavin
Trouble in the halls of microfinance banks…
Next.com
With more than half of the adult population unable to access retail banking services, the introduction of microfinance banking by the Central Bank of Nigeria (CBN) was welcomed by Nigeria’s development partners and the general populace.
Microfinance is the provision of credit and other financial services to people in lower income groups, with one of its major characteristics being that it offers limited products with no formal collateral.
In 2001, the Central Bank of Nigeria revealed that 160 microfinance banks were already registered.
However, this laudable concept was soon caught in the thorns of an inefficient Nigerian economic system and hijacked by money bags.
An analyst, who works with one of the microfinance banks, said the bank’s location was the first sign that hopes for its transformation of Nigeria’s banking landscape are misplaced.
A significant percentage of all licenced microfinance banks are believed to reside in highbrow areas of Nigeria’s cities.
“What would a microfinance bank be doing at Adeola Odeku, Victoria Island or Ikoyi when the target market is at Okokomaiko, Mile 2, or all other places where you can find a plantain seller, recharge card seller, okada rider and so on?,” he said, on condition of anonymity.
Posted on February 27, 2009 - by Gavin
Eds microfinance bank opens shop…
Vanguard Online
A new microfinance bank has opened its doors to the banking public. The bank Enterprise Development Services Microfinance Bank Limited (EDS) came on stream recently. Chief Operating Officer of the bank, Mr. Andrew Agbaga, at a briefing on the visions and operations of the bank, remarked that the value, discipline of the bank was to ensure that it leads in lower price offering, products and services.
Supporting the CBN Governor, Professor Chukwuma Soludo’s recent statement on the set up of banks to combat poverty as a collective duty, Agbaga emphasised that the need for the launch of the microfinance policy followed the realisation that the poor had no access to credit facilities, therefore, the core objective is to empower the customers. “Our customers will be our business partners and not just customers,” he stressed.
He added that: ‘’Faced with the challenge of making our economy work with the global meltdown, we have developed a system that will ensure that all our customers regardless of the amount you have in the account, you will be treated as a king or queen, as it may be.’
‘
EDS was incorporated last June 25 with a crop of seasoned financial experts of over 20 years experience in banking, insurance and other financial services who are desirous of making the firm the one customer-stop financial institution, according to Agbaga. (more…)
Posted on September 2, 2008 - by James
Nigeria: Microfinance – Central Bank Decries Low Participation…
The Central Bank of Nigeria (CBN) Plateau State branch controller, Mr Mathias Kura has lamented poor participation in the micro-finance bank industries in the North, saying it is ironical that the same north where there is so much poverty, and who should utilise such facilities has recorded such a poor performance.
Kura, noted this in a keynote address at a One-day workshop organised by the Chartered Institute of Bankers of Nigeria (CIBN), Jos branch, on Micro-finance, Problems and Prospects. He also added that Anambra State alone has over 100 microfinance… [click here to read the rest of this article...]
Posted on August 25, 2008 - by James
Nigeria Approves 8 Microfinance Institutions…
The Central Bank of Nigeria (CBN) yesterday gave approval-in-principle to Accion, a United States-based microfinance company and seven others, including indigenous firms, to operate as Micro-Finance Banks (MFBs) in the country… [click here to read the rest of this article...]
The MiFi Report
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