Business
Distressed Micro-Finance Banks To Face Hammer
There are ongoing plans by the Central Bank of Nigeria (CBN) to revoke licenses of distressed microfinance banks in the country.
It was gathered that CBN has told the affected institutions to brace up for the challenges ahead. It was part of the issues discussed at the recently held Committee of Microfinance Banks in Nigeria (COMBIN) meeting.
Investigations shows that a letter in respect of this directive has been sent by the apex bank to the effected institutions.
The CBN in the letter mandated the effected microfinance banks to temporarily stop receiving deposits or giving out loans until they either recapitalise or merge with a stronger bank to form a strong MFB.
CBN is planning to release the list of the concerned banks to the public early this year. The banks have been given till January 2010 to either merge or recapitalise or risk closure.
The affected institutions are likely to be handed over to the Nigerian Deposits Insurance Corporation (NDIC) by the CBN after revocation of their license. NDIC is expected to settle depositors of the affected banks of the insured deposits.
The development has caused uneasiness in the MFB sector as the affected banks have embarked on aggressive loan recovery to make their banks liquidate. Most of the affected banks are those currently facing liquidity problems while some have collapsed.
A source from the CBN hinted that the list of the affected banks has been compiled and would be released soon. “We have forwarded letters to the affected institutions, mandating them to stop collecting deposits or giving out loans,” he said.