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Multiple borrowing, a challenge in micro financing, says operator

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The Chief Operating Officer, Fortis Micro Finance Bank (MFB),  Mr Jero Omare-Ogah, says multiple borrowing by customers remains a major challenge to the survival of the MFBs in the country.

Omare-Ogah in an interview in Abuja said that the development was worrisome in spite of the Central Bank of Nigeria’s efforts at  checking the trend by setting up Credit Bureau.

Credit Bureau was set up by the CBN to  check the financial status of potential borrowers. “The issue of multiple borrowing is a major problem in the industry. Customers go from one MFB to the other to access loans and it becomes a problem when it is time for payment.

“The high number of bad debts recorded by  MFBs have  to do with the attitude of not repaying loans by borrowers.” Omare-Ogah called on the CBN to put in place a re-financing institution that could  re-finance the bad debts of MFBs, pending when a legal system in that regard was  instituted. He explained that the  duty of a refinancing  institution would be to refinance  bad loans and the borrower would repay the money  over a period of time with interest to sustain the institution.

According to him,  another way to minimise the occurrence of multiple borrowing is  by asking customers to provide bank statements from other banks they do business with. “This way, if a customer has already taken a loan somewhere, it will be reflected in the bank statement and we will know.”

He urged  MFBs operators to collaborate  to eliminate the problem of  multiple borrowing in the sector.

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