CBN won’t extend deadline for Microfinance Banks

Weak microfiance banks will not get more time to recapitalise, it was learnt yesterday.

Discussions between the management of the 121 banks and the Central Bank of Nigeria (CBN) to seek a new waiver failed to yield results.

CBN spokesman Mohammed Abdullahi  confirmed that the apex bank would not extend the January 31 deadline.

CBN had granted the affected banks three months Approval In Principle (AIP) last October. This covered between October 2010 to January 31, 2011, and was meant for the banks whose names were erroneously mentioned in the list of the 224 micro finance banks that had their licences revoked for failing CBN-induced test. These AIPs are to ensure that the affected banks recapitalise from N10million to N20million, shut down illegal branches/cash centres, embrace good corporate governance as well as meet the requirements that would guarantee them final approval. 

However, many of the banks have not complied with these requirements, fuelling speculations of a fresh waiver from the apex bank. Industry sources said only 30 per cent of these banks had met the CBN requirements for final approval, and that the apex bank is left with no other option than to accede to the pressure to further extend the deadline for recapitalisation.

But the CBN ruled out any extension, saying that such suggestions “lack merits and not in accordance with the stipulated agreements”. Abdullahi said the January 31 deadline between the apex bank and the owners of the 121 banks still stand.

He insisted that the earlier agreement supersedes any other developments in the banking sub-sector, adding that extending the deadline for recapitalisation does not suffice in the thinking of the CBN. 

 “CBN has no intention of extending the deadline for the affected banks. The fact that the deadline given to the banks elapsed in January does not mean that CBN has extended the deadline. CBN is not thinking of that now. What we are doing now is to verify the claims that the banks have met the conditions for recapitalisation. Those that have met the requirements would be recommendeded for the final approval while those that have not are to face the consequence,” he said.

The chairman, National Association of Microfinance Banks (NAMB), Lagos State Chapter, Mr Olufemi Babajide, said the CBN might not extend the deadline. 

Babajide said NAMB members had tried to seek an extension to enable the affected operators look for money, but to no avail.

He said:” We are pleading with CBN to extend the deadline for six months. The reason is that there is no point implementing the deadline when most of the banks are badly affected. What we are pleading for is that CBN should extend the deadline for six months, and from all indications, there is nothing like that.”

The NAMB boss said extension would enable the operators regain confidence, and make money to shore up their capital base.

“Confidence is dwindling in the sub-sector. The customers are no longer coming to the micro finance banks, hence the need for extension,” he added. 

Managing Director, Gold Microfinance Bank, Mr Lanre Abiola, however, said it was obvious that the CBN would still extend the deadline, considering  the events in the sub-sector.