CHAIRMAN of Lagos Chapter of National Association of Micro-finance Banks (NAMB), Mr Olufemi Babajide, Wednesday, said that micro-finance banks in Lagos were being owed over N10 billion.

Babajide, who disclosed this in Lagos, said that NAMB had begun to solicit the support of the Federal Government for the establishment of special courts to try loan defaulters.

He said that loan recovery would be a major challenge in the sub-sector in future if the problem was not properly addressed now. According to him, there is the need to stop the incidence of loan default so that it does not disrupt smooth running of micro-finance banks. He expressed regret that the extant laws were unfair to financial institutions, particularly on issues pertaining to loan recovery.

“Micro-finance banks are frustrated at the way loan cases are being adjourned and the high legal fees. We have cases that have been in court for more than four years and some loan defaulters have died in the process. Even the law enforcement agents are not helping matters as they consider the cases civil matters. We are appealing to the Federal Government to institute special courts for loan defaulters so that micro-finance banks can grow,” he said.

Babajide, who is also the Chief Executive of Unicredit Micro-finance Bank, alleged that some people deliberately walk into banks to defraud.

To my surprise, some of the customers are doing it with criminal intention; some also believe they are benefitting from dividends of democracy; what kind of dividend is that when our operations are being affected.  There is the need for customers that are not willing to pay to be criminalised,” Babajide said.

According to him, in countries like Bangladesh, India and Philippines that practise core micro-finance banking, a debtor is not buried until the family agrees to pay the debt he or she owed. He said that stakeholders would soon sponsor a private bill that would see to the establishment of special courts to try offenders. “We intend to send more private bills to the National Assembly to move the sector forward,” he said