The managements of two micro-finance banks in Lagos which accounts are being audited by the CBN on Friday in Lagos urged more time to shore up their capital base.

They are Associated Investment Micro-finance Bank and MCB Micro-finance Bank. They said that the three months the CBN gave them was too short to raise their capital base from N20 million to about N50 million.

The CBN gave the directive in September when it found that some of the audited micro-finance banks had records of non-performing loans. Mr Adeniyi Talabi, Managing Director of Associated Investment Micro-finance Bank, Lagos, said that three months was to short to raise additional funds to make up N5O million.

“For micro-finance banks there is no readily accessible window for us to access funds. That type of money cannot be raised within a short time, especially with the downturn in deposit mobilisation,’’ Talabi said. He added: “We want the CBN to give us sometime to raise such huge amount of money.”

The Chairman of MCB Micro-finance Bank, Lagos, Akin Obasa, said some operators might not find it easy to access such funds from commercial banks because of the CBN’s searchlight on them. We implore the regulators to give reasonable time if we need to shore up our capital base,’’ Obasa said.

Mr Olufemi Fabamwo, the Acting Director, Other Financial Institutions Department (OFID) in the CBN, had said that micro-finance banks needed a “fat’’ capital base to survive the current economic realities.

Fabamwo said recently at a workshop in Lagos that the micro-finance banks needed a minimum of N200 million to meet the needs of the active poor. The workshop was organised by Micro, Small and Medium Enterprise (MSME) Project Nigeria.

NDIC identifies reasons for crisis in banking sector Nigeria Deposit Insurance Corporation (NDIC) on Thursday in Kaduna identified poor corporate governance and poor risk management among major causes of the recent development in the banking sector.  Mr Joshua Etopidiok, Deputy Director, Bank Examination Department, made the statement at a Workshop for business editors and finance correspondents, organised by NDIC.

He said other causes of instability in the sector were inability to manage expansion, low asset quality and inadequate supervisory framework.

“It should be emphasised that the global financial meltdown had a significant impact on the present crisis,’’ he said The director said the recent reforms witnessed in the sector were in various categories but stressed that the major focus was to ensure sustainability of the sector.

The reform categories included financial and technical assistance, zero tolerance for poor corporate governance and the proposed Asset Management Company. He added that the development had further emphasised the need to strengthen corporate governance and risk management practices in the banks “

The supervisors and regulators need to adopt risk based approaches to mitigate inherent risk in banks,” Etopidiok said He pointed out that physical infrastructure and strong legal environment were crucial and must exist for a sustainable banking system.

Etopidiok said lessons for sustainable management of the sector included minimum regulatory capital, improved supervisory review process and market discipline through disclosure. These vital lessons should be learnt by operators for sustainable and healthy development of the sector,” he stressed.