By Amaka Agwuegbo
National Association of Microfinance Banks, NAMB, Lagos State chapter has called on the federal government to compel the Central Bank of Nigeria, CBN, and the Nigeria Deposit Insurance Corporation, NDIC to reverse the revocation of licenses of 224 microfinance banks.

“Laid down procedures and thorough investigations were not carried out to determine the solvency of the banks”, said Chief Olutayo Adenekan, Chairman of the Lagos NAMB.

The CBN had, on September 24,2010, revoked the operating licenses of 224 MFBs on grounds that they are ‘terminally distressed’ and ‘technically insolvent’.

Speaking at a press conference organized by the Lagos State chapter of the National Association of Microfinance Banks, NAMB, Adenekan said CBN’s efforts at sanitising the microfinance sector is sounding its death knell as customers of non affected banks are queuing to withdraw their savings.

“The revocation only serves to kill the sector and the economy as thorough investigations were not carried out to determine which banks are illiquid.

“According to BOFIA, the CBN has the right to look into our books and some banks were just granted operating licenses and some were given 2 months to recapitalize, which didn’t elapse before the CBN revoked our licenses.”

Expressing concern over the impact of the closure on their loan and deposit customers, the executives are asking the federal government to compel the CBN and NDIC to immediately reopen the offices of the closed MFBs;

CBN should work together with the NAMB to ensure that members are operating within the stipulated guidelines to cushion the negative effects of the pronouncement;

As contained in policy framework, the CBN should set up a Microfinance Development Fund to provide the necessary support for the development of the sector, as is done in other countries.

Affected operators in the South West zone have already dragged the CBN to the Federal High Court, Ikeja, Lagos, to challenge the revocation of their licences.