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CBN to handover debtors of distressed MFBs to EFCC

The Central Bank of Nigeria (CBN) would soon handover debtors of distressed microfinance banks to the Economic and Financial Crimes Commission (EFCC).


Financial Vanguard  investigation revealed that the apex bank is already compiling the names of debtors of distressed MFBs with the aim of publishing them and turning the list over to the EFCC in cases of criminality.

A reliable CBN source who confirmed this to Financial Vanguard said, “This is because there are some people who have taken loans from MFBs and have refused to pay back. So we would publish their names and hand them over to law enforcement agents to recover the loans. If there are some issues bordering on criminalities, we would report such to the appropriate quarters.”

The global financial crisis impacted heavily on the microfinance subsector occasioning liquidity crisis which forced many microfinance banks to close shop especially in Lagos.

Consequently, the apex bank, after its special audit of banks, beamed its searchlight on MFBs with an audit exercise which is on-going in Lagos. It was gathered that the apex bank is about to  conclude the audit of MFBs in Lagos from where it would move to MFBs in Port Harcourt and Abuja. In was gathered that the audit of MFBs in Lagos revealed a lot of rot in the banks than anticipated by the apex bank especially in the area of non-performing insider loans. Consequently, the apex bank decided to publish the names of the debtors of the bank and engage the EFCC to recover the loans.

Meanwhile investigation revealed that the apex bank would revoke the operating license of MFBs that have closed shop for more than six months. “Those MFBs that on their own have already closed shop, there is a provision in BOFIA that you can’t close your office from carrying out the purpose for which you are licensed for a period of six consecutive months or any six months within a 12_month calendar. Any MFB that does that has violated the law and it means they don’t want to operate or are unable to operate. And you’ll agree with me that such institutions should quietly close down for those who are doing very well to continue.” a CBN source told Financial Vanguard.

Last year the CBN wrote to the shareholders of distressed MFBs to inject additional capital or risk the revocation of their operating license. It was however gathered that the apex bank is yet to set a deadline for them to recapitalise or embrace the option of merger and acquisition. It was gathered that the apex bank might wait for the conclusion of the on going audit exercise so that it would have a complete picture of the extent of the problem in the industry and adopt a wholistic approach which would apply to all the MFBs.

The CBN governor, Mallam Lamido Sanusi told journalist in Enugu at the end of the Bankers Committee retreat in December that the apex bank is working on a comprehensive reform package for the MFB subsector. But a highly placed source told Vanguard that the reform package is not likely to  include a general recapitalisation exercise. The source said, “Talking of the general recapitalization, that is not yet in place”.

Meanwhile the election of executives for the new umbrella body of MFBs, the National Association of Microfinance Banks (NAMB) which was scheduled to hold last Friday have been postponed to next month.

MFB sources told Financial Vanguard that the election would now hold on Mach 25th. A member of the caretaker committee who spoke on anonymity told Financial Vanguard.

“The AGM was postponed so that we can have adequate time for preparations. 29th of January that was initially proposed was too soon and it would not give room for the involvement of all players. The constitution requires that we give 21 days notice to all members to attend an AGM and we needed more time to complete the formal registration of the association.”, the member said.


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