CBN extends MFBs’ recapitalisation deadline on economic concern

Microfinance Bank recapitalisation has been extended by the apex bank by a year in response to the development in the economy.

The Central Bank of Nigeria revealed this on Wednesday as it said it has reviewed the deadline for minimum capital requirements from the micro-lenders.

In a circular to all MFBs signed by the Director Financial Policy and Regulatory Department, Kevin Amugo, the CBN held that the latest policy directive was informed by the impact of the COVID-19 pandemic on economic activities.

“The CBN in consideration of the impact of COVID-19 pandemic on economic activities has revised deadline for compliance with the minimum capital requirement for MfBs in Nigeria communicated via its circular dated March 7, 2019”, the statement reads.

Specifically, the CBN directed that MFBs operating in rural, unbanked and underbanked areas (Tier 2) shall meet the N35 million capital threshold by April 2021 and N50m by April 2022.

However, MFBs operating in urban high density areas (Tier 1) are expected to meet the N100 million capital threshold by April 2021 and N200 million by April 2022.

Also, the apex bank directed that State MFBs shall increase their capital base to N500 million by April 2021 and N1 billion by April 2020.

Thus, National MFBs are required to meet the minimum capital of N3.5 billion by April 2021 and N5 billion by April 2022.

The apex bank advised all operators to be guided accordingly.

MarketForces recalled that the CBN had in March, 2019 issued the revised 2012 supervisory and regulatory guidelines for the MFBs to support the development and sustainability of the sub-sector.

In the circular it stated that the measure was taken as part of the “the need to reposition and strengthen MFB towards improved performance had become apparent as revealed from the report of a recent review of the subsector.

“Accordingly, the 2012 guidelines have been reviewed to strengthen and complement other on-going reform in the MFB sector. An exposure draft of the review guidelines is hereby issued for comments and observations”, the apex bank added.

CBN extends MFBs’ recapitalisation deadline on economic concern