By Amaka Abayomi
The Central Bank of Nigeria, CBN, has said that only well capitalized microfinance banks, MFBs, that are ready to comply with rules and regulation will, henceforth, be allowed to operate in sector.

Speaking to MFB operators, Director, Other Financial Institutions Department (OFID), CBN, Mr. Femi Fabamwo, said the decision became necessary in order to safeguard MFBs’ depositors and boost public confidence in the sector.

According to Fabamwo, “Microfi-nance banking is a regulated activity and, going forward, only sound and well capitalized MFBs that are ready to comply with rules and regulation will be allowed to operate.

“Intense surveillance of the sector will continue to cleanse it of unlicensed/illegal operators. The Nigerian microfi-nance sector is fledgling, but it offers great potentials for financial inclusion and sustainable economic development, employment generation and poverty reduction, which are yet to be harnessed.

“Therefore, it has become imperative for the CBN as the regulator to ensure that operators are alive to their responsibilities as providers of financial services to the ‘active poor’ while protecting their deposits.”

Fabamwo said though the sanitization exercise had negative effects on the sector, but it would help ensure market discipline. Awareness campaign, public sensitization and road shows would be employed to enlighten the banking public about banking with MFBs.

He tasked MFB operators on doing it right so as to enable both operators and customers enjoy the numerous opportunities that microfinance banking offers.

“Access to payment facilities is a major enabler for achieving universal access to finance. Branchless banking and mobile banking offer tremendous capability to pay and receive money easily, to expand financial possibilities and to reduce the cost of providing retail banking infrastructure by MFBs are some of the opportunities that need to be fully explored.”

To this end, Fabamwo said the CBN has adopted a 4-pronged pillar reform of sanitizing the sector, capacity building, restructuring, and restoring public confidence to achieve compliance in the sector.