Posts Tagged ‘microfinance banks’
Posted on November 26, 2009 - by boris
Pakistan: SBP allows microfinance banks to raise foreign currency loans from international donor agencies…
Liquidity-starved microfinance banks and institutions can now raise foreign currency-denominated loans from international donor agencies, the State Bank of Pakistan (SBP) said on Wednesday.
The purpose of the loan, which can also come from commercial financial institutions, should only be to finance loan portfolio of microfinance banks and borrowing can be raised in US dollar, euro, pound sterling and Japanese yen.
“This decision will help microfinance providers access different sources of debt that may offer longer tenor, and in turn reduce their funding risk,” the SBP said in a press release. Microfinance banks would have to borrow these foreign currency loans for a minimum period of two years and loan pricing will be based on a reference rate such as London Inter-bank Offered Rate (LIBOR), it added.
Source: http://www.thenews.com.pk/daily_detail.asp?id=210416
Posted on October 1, 2009 - by boris
Nigeria: Microfinance banks threatened by calls for increase in capital base…
The banking industry may face another liquidity strain if microfinance banks are to implement the Central Bank’s proposal to shore up their capital Base.
“That would be very difficult, especially for now because of what is happening in the financial industry,” said Francis Akpudi, managing director, Solace Microfinance Bank, Warri, Delta State.
“Already, we are finding it difficult to even get deposits. Maybe when the whole present financial situation is more relaxed, maybe, but for now, it would be very difficult to achieve that,” he added.
He explained that though the idea is a good one, it will be very challenging meeting it in view of the financial situation in the country.
The Other Financial Institutions Department (OFID) of the Central Bank of Nigeria (CBN) on Monday, announced that microfinance banks (MFBs) should increase their capital base above the current N20 million.
Source: http://234next.com/csp/cms/sites/Next/Money/Finance/5464789-147/story.csp
Posted on September 30, 2009 - by boris
Central Bank of Nigeria warns microfinance banks against false rendition of returns…
The Central Bank of Nigeria (CBN) has warned micro- finance banks (MFBs) to stop falsifying monthly returns.
Other Financial Institutions Department (OFID) Director, Mr. Femi Fabamwo, said in Lagos “Since the inception of the micro-finance policy in 2007, there have been challenges in rendition of returns. These challenges include late or non rendition of returns, incomplete and falsification of returns.
“Others include clerical errors, wrong classifications of items, and outright failure to balance the Total Assets with the Total Liabilities. The CBN will no longer continue to accept such irregularities.
Source: http://www.vanguardngr.com/2009/09/29/cbn-warns-mfbs-operators-against-false-rendition-of-returns/
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 August 28, 2009 - by boris
The State Bank of Pakistan amends the Prudential Regulations for MFBs…
The State Bank of Pakistan has amended the Prudential Regulations for Microfinance Bank (MFBs) which will allow MFBs to extend value added microfinance services to its clientele.
These revisions are intended to remove the regulatory bottlenecks, which were pointed out by the industry in interactions with SBP recently.
Following these amendments, MFBs can now extend micro loans of up to Rs 150,000 for general purpose and Rs 500,000 for housing purpose.
Also, the borrower’s annual income has been revised upwards from Rs 150,000 to Rs 300,000 for general loans and Rs 600,000 for housing loans to allow room for graduation of microfinance clients.
Source: http://www.dailytimes.com.pk/default.asp?page=2009\08\28\story_28-8-2009_pg5_13
Posted on August 14, 2009 - by boris
Central Bank of Nigeria to improve Corporate governance in microfinance banks…
Managing Director of Lagos-based Imperial Microfinance Bank, Mr. Ejike Azubuike, has called for broad based-boards of directors as panacea to the problem of poor corporate governance in microfinance banks, MFB.
He said “Corporate governance in microfinance banks can be improved on by the CBN ensuring that the board of every microfinance bank is broad-based.
“This is can be achieved by insisting on a minimum of 5-7 board members and by eliminating a situation where family members dominate boards of microfinance banks. Once the board is broad-based, that is a solid step towards ensuring good corporate governance.”
Source: http://www.vanguardngr.com/2009/08/13/corporate-governance-operator-advocates-broad-based-boards-for-mfb/
Posted on August 5, 2009 - by boris
The Central Bank of Nigeria will deal with microfinance banks that have failed to submit their monthly returns…
THE Central Bank of Nigeria (CBN) says it will now sanction microfinance banks that have failed to submit their monthly returns, as and when due.
The Acting Director, Other Financial Institutions Department (OFID) at the apex bank, Mr. Olufemi Fabamwo disclosed this to the News Agency of Nigeria (NAN) on Monday in Lagos.
Fabamwo said that the CBN had extensively indicated that the 5th of every month was the new deadline for the rendition of the returns. He warned that failure to render returns for six consecutive months was an offence, which could lead to the revocation of the operating licenses of such institutions.
Source: http://www.ngrguardiannews.com/business/article04/indexn2_html?pdate=050809&ptitle=CBN%20tasks%20microfinance%20banks%20on%20monthly%20returns
Posted on July 28, 2009 - by boris
Nigerian Central Bank warns of increase in non-performing microfinance loans, poor corporate governance and commits to impose sanctions on errant officials at microfinance banks…
microcapital.org posted:
In a recent report on the Nigerian news portal, Business Day Online [1], entitled ‘CBN to sanction erring directors of microfinance, mortgage banks’ [2], it was reported by Hope Moses-Ashike that the Central Bank of Nigeria (CBN) [3] has threatened to dismiss and prosecute senior officers and operators at microfinance institutions and primary mortgage banks who have been found to have engaged in malpractice.
CBN officials expressed displeasure over improper conduct by chairmen, directors, senior management staff and auditors at microfinance institutions and other financial institutions in the country. They warned the operators from Lagos, Ondo, Ogun, Osun, Edo, Ekiti, Oyo and Kwara who attended a weekend meeting for financial institutions in Lagos that the Nigerian police and the Economic and Financial Crimes Commission (EFCC) [4] will be invited to intervene anytime any indication of malpractice is discovered.
(more…)
Posted on July 6, 2009 - by boris
MFBs hopeful on positive signs for profits in second half year…
BUSINESSDAY
Microfinance bank operators have admitted that the effect of global financial crises in the first half year was an eye opener to them assuring that they were now ready to take the bull by the horn in terms of mobilising more funds as strategy to economic recovery in the next half year.
To this effect, not a few of them say they are optimistic that the next six months would be much better when compared to the last half year. They insist that now that the economy has started to improve slightly, especially as evidenced in the price of oil hitting about $70 as against the $45 early this year, even as there is also noticeable improvement in the capital market.
Speaking on his plans and strategies for the next half year, Victor Mfon, director, Business Development Manager, Olive Microfinance Bank Limited disclosed that his bank will seek additional funding to be able to penetrate additional markets.
(more…)
Posted on July 3, 2009 - by boris
Abia releases N4b to MSMEs’ operators…
Abia State government
Abia State government has released N 4 billion to operators of Micro, Small and Medium Enterprises (MSMEs), under the Central Bank of Nigeria (CBN) Trust Model and Agricultural Credit Guarantee Scheme (ACGS).
The programme would be executed in collaboration with Guaranty Trust Bank Plc, Spring Bank, Fin Bank and Wider Perspectives Limited (a consultancy firm).
Essentially, the fund injection programme was targeting at bolstering the operations of MSMEs.
(more…)
Posted on July 2, 2009 - by boris
$8.4m grants to six MFBs Stir the Sub-Sector…
The World Bank and Federal Government
The World Bank and Federal Government last month approved the sum of $8.4 million grants to six Microfinance Banks (MFBs) out of over 800 operating in the country.
With the dearth of funds staring Micro Finance operators in the faces, the grants will no doubt serve as major relief, expected to be disbursed to the low income earners for which the institutions were created for in the first instance.
But commendable as the intentions of the World Bank and the Federal Governments may be, the selective disbursement is causing disquiet in the sub sector.
(more…)
Posted on July 2, 2009 - by boris
Nigeria: Microfinance Banks Critical to Poverty Eradication By 2020…
Vanguard
Microfinance banks have been identified as a critical factor to achieving the nation’s goal of poverty eradication by year 2020.|
This was disclosed by the Managing Director of Bank of Industry (BoI) Microfinance Bank, Mr. Kevin Iyamu, who affirmed that the sector is capable of covering majority of the active poor by year 2020, thereby, creating numerous job opportunities and reducing poverty.
Speaking with Vanguard, Mr. Iyamu said that with more microfinance banks springing up and with more people being able to pay back loans, the sector shall cover the market by 2020, which can be achieved by addressing the problems of lack of access to credit by entrepreneurs who do not have access to commercial banks and strengthening the weak capacity of such entrepreneurs.
(more…)
Posted on April 20, 2009 - by Gavin
Inter-bank market for MFBs: how effective?…
Business Day
The idea of an inter- bank market for microfinance banks is no doubt an interesting one. For starters, such a platform will provide an opportunity for increased mobility of funds among microfinance banking operators, thereby reducing the cost of funding and improving the net interest margin by providing these micro-credit banks with a solid funding base to address short and medium-term requirements. But as laudable as the initiative may be, it is not without challenges as regards effectiveness, considering that the microfinance institutions are spread haphazardly all over the country. This, surely, is unlike the money market association for commercial banks, which has about 24 branches with headquarters in Lagos.
However, microfinance operators see the idea of such an association as a welcome development, since they feel it will boost liquidity and enhance poverty eradication. According to Kashim Olanrewaju, managing director, Afribank Microfinance Limited, an inter-bank market will surely boost the liquidity of the practitioners and ultimately enhance the poverty alleviation programme as well as the overall MFB objectives by making credit available to the end-users.
Moreover, he feels the market will inject sanity and good corporate governance into the system, both of which will form part of the rating modalities for any participating MFBs. (more…)
Posted on April 17, 2009 - by Gavin
Yunus briefs Hillary about Grameen healthcare plans…
The Daily Star
US Secretary of State Hillary Clinton yesterday received Prof Muhammad Yunus and the Grameen Healthcare delegation to the World Healthcare Congress at her office.
During a 90 minute meeting with the 14-member Grameen delegation, Prof Yunus briefed the secretary about Grameen’s healthcare plans and social business initiatives.
Secretary Clinton, who visited Grameen Bank in 1995, and is a long-time proponent of microcredit for the poor, offered her support to Grameen’s healthcare programme.
Prof Yunus discussed, in particular, the proposed creation of a Grameen Medical College and teaching hospital as joint venture collaboration with a leading school of medicine of a premier US university.
Prof Yunus updated the US secretary of state on the latest developments within Grameen Bank. He also emphasized the importance of a new legislation to create microfinance banks in the USA and other countries.
Hillary sought Prof Yunus’s assistance in crafting a bill for that purpose. She pointed out that microfinance can play a key role during the current financial crisis by helping the unemployed generate to create self-employment. (more…)
Posted on March 23, 2009 - by Gavin
How cost of funds affects interest rates in microfinance banks…
Business Day
High interest rate has been a major contention in MFBs, Lanre Bamkole, managing director, Lifegate Microfinance Bank Limited, in this interview with HOPE MOSES-ASHIKE discloses that more funds can bring down interest rates and loan tenure extension.
Interest rate Our interest rates are currently five to six percent per month, depending on the particular product. It may be slightly lower or higher. Invariably, there are some challenges we have in microfinance sector. Funding is a major issue. So, the more funds you have, the more you can extend the tenure of the loan you give, as well as reduce the interest rate. What we need to understand is that microfinance is a very cost intensive marketing aspect because we go to customers to collect proceeds, unlike the conventional banks. That brings added cost to us. And what it will cost you to chase a loan of N1 will be the same it would cost you to chase a loan of N1 million.
Government has an important role to play and I am happy that various governments, particularly, the state governments are beginning to put aside certain funds for microfinance because we are reaching the grassroots in a conventional manner, not in adhoc or undocumented manner. (more…)
Posted on March 17, 2009 - by Gavin
Farmers: We can feed the nation if…
NEXT
Farmers in Nigeria are optimistic that with government’s assistance they will be able to solve the persisting food shortage in the country.
“If given the right equipment, facilities and financial assistance to carry out our farming operation we can feed the country and even provide more for export,” said Zubairu Abudlahi, a commercial yam and cereals farmer, in Igabi, Kaduna State.
The farmers spoke at the Kaduna international Trade fair in Kaduna last week.
Commenting on the hike in the prices of food stuff and the global food shortage, Mr. Abudlahi said “the problems faced by the farmers are numerous, that is why they have not been utilising the abundant land in Nigeria to produce sufficient agricultural produce.
“The Nigerian soil is so rich and blessed that we can plant almost every agricultural produce we eat in the country. The climatic condition is also favourable as we don’t have the problem of drought or late rain like some countries in Africa. The problems we have are man-made.”
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 16, 2009 - by Gavin
Bridging poverty divide using microfinance banks…
There is no gainsaying the fact that so far, the Federal Government’s efforts to eradicate poverty in Nigeria have been inequitably spread. This puts a damper on the nation’s vision to be ranked among the top three emerging markets in terms of Gross Domestic Product (GDP) ratio, access to credit for the productive Small and Medium Enterprises (SME) sub-sector, and 70 percent of the Nigerian population by 2020.
Going by the World Bank’s report released last month, for instance, some states in northern Nigeria are highly “unbanked” and are forced to contend with grinding poverty. Out of 818 microfinance banks (now 844) in the nation’s microfinance sector, the entire northern region has only 23.9 percent geographical concentration of Microfinance banks (MFBs), even as urban areas such as Lagos State have the highest density of microfinance banks.
For this reason, industry watchers assert that if efforts to curb poverty are not equitably spread across all the states that make up the federation, the policy targets of microfinance banks would be rendered unachievable.
CBN, under the microfinance policy, regulatory and supervisory framework for Nigeria states as its target, “To cover the majority of the poor but economically active population by 2020; thereby creating millions of jobs and reducing poverty.
“To increase the share of micro credit as percentage of total credit to the economy from 0.9 percent in 2005 to at least 20 percent in 2020; and the share of micro credit as percentage of GDP from 0.2 percent in 2005 to at least five percent in 2020.
“To promote the participation of at least two-thirds of state and local governments in micro credit financing by 2015.To eliminate gender disparity by improving women’s access to financial services by 5 percent annually; and to increase the number of linkages among universal banks, development banks, specialised finance institutions and microfinance banks by 10 percent annually.
Posted on February 9, 2009 - by Gavin
High Default Rate Worries Microfinance Banks…
DESPITE the optimism being expressed in some quarters that the new economic framework, set up by President Yar’Adua to respond to the global economic crisis, would soon address the nation’s economic challenges, there seems to be a lull in the microfinance sub-sector of the Nigerian financial market.
The Guardian’s investigation, at the weekend, revealed that most Microfinance banks (MFBs) may have adopted a ‘wait-and-see’ approach to the release of funds due to the uncertainty surrounding the Nigerian business environment.
The reason, according to watchers of the industry, is not unconnected with the fear of possible default in repayment.
A source in one of the banks said that ‘guaranteeing Return of Investment has become the overriding consideration, and has almost relegated the allurement of Return on Investment (ROI) to the background, even this time that the global economic crisis is creating a sense of instability in Nigeria.”
He further cited Naira depreciation, delay by the National Assembly, to approve the 2009 Budget, and the dwindling prices of crude oil in the international market, as major issues that could threaten profitability and thereby jeopardise chances of loan recovery, even from small businesses… [click here to read the rest of this article...]
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