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Microfinance Banks urged to guard against mismatch of funds

The Managing Director,  Associated Investments Microfinance Bank, Lagos, Mr Adeniyi Talabi, has advised Microfinance banks in the country to concentrate on the disbursement of micro loans.

Talabi made the plea during an interview with newsmen on Tuesday in Lagos. He said that mismatching of funds was responsible for the crisis now plaguing some microfinance banks in the country.

According to Talabi, the microfinance banks should concentrate only in disbursing loans to businesses structured to repay such loans on a daily basis. “From all indications, the MFBs did not do quite well in the third quarter in terms of loan performance and deposit mobilisation, compared to the same period last year.

But the Central Bank of Nigeria (CBN) has recently said that a ratio of 80 per cent of micro loans to 20 per cent of other loans will help the banks to meet their objective of poverty alleviation through various empowerment schemes,” he said.

Talabi, however, noted that granting loans to more micro traders had helped the banks to operate below the CBN”s loan portfolio risk of 2.5 per cent.
“This strategy has enabled the Associated Investments Microfinance Bank to impact on lives within our immediate community through regular disbursement of empowerment loans. Within its short time of operation, the bank’s customer base has grown to 8,000 and it has also been able to empower 1,748 women and 661 men,” he said. Talabi said that although the industry was plagued by some challenges from the recent credit crunch, the operators should still continue to play by the rules.

“The sector could fair well if industry operators give it appropriate attention. Since the industry has survived tensions unleashed by the global cash crunch, we implore all policy makers to assist the banks to continue to sustain the informal sector,” he said.

Talabi noted that the most-effective way to develop the nation was to build it up from the bottom. We also need some public confidence to guarantee the realisation of the mission of the banks,” he added.


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