BY AMAKA ABAYOMI
Operators in the Nigerian microfinance sector have hailed the Central Bank of Nigeria (CBN) for coming up with the electronic mode of monthly returns rendition, especially with the recent introduction of the codes, saying such has reduced the challenges they faced with the manual method.

As operators in the financial industry, microfinance banks (MFBs) are expected to provide financial information that are credible and in a manner acceptable to the regulatory authorities. The responsibilities for rendition of returns are clearly stated in Section 331 (1) and (2) of the Companies and Allied Matters Act of 1990.

These extensive provisions are further supported by Section 24 (1) and (2) of the Banks and Other Financial Institutions Act (BOFIA) Section 6.2 (i) of the Regulatory and Supervisory Guidelines for Microfinance Banks in Nigeria.

Speaking at the November 1, 2010, workshop on rendition of returns for MFBs organized by the Other Financial Institutions Supervision Department (OFISD) of the CBN, in collaboration with Nigeria Deposit Insurance Corporation (NDIC), the Director, OFISD, Mr. Femi Fabamwo, said since the inception of the microfinance policy in 2007, there have been challenges in rendition of returns.

He listed the challenges to include late or non_rendition of returns, incomplete and falsification of returns, clerical errors, wrong classifications of items, and outright failure to balance the total assets with the total liabilities.

In its bid to forestall the lapses identified in the operations of MFBs and to enhance effective supervision of the MFBs by the regulator, the CBN designed a system for electronic rendition of MFBs monthly returns and organised a two day workshop aimed at familiarising operators with the new application designed to capture and enhance accuracy of data received from them.

As a result of the success recorded from the pilot test that commenced since January 2011, MFBs have been given June 2011 to automate their monthly returns process as the CBN would stop receiving hard copies of the returns.

To this end, codes have been assigned to each MFB which they are expected to complete their monthly returns in line with the naming convention starting with MFB name, institutional code, frequency of submission, the reporting month and year of reporting.

The workshop is meant to provide in_depth under_standing of the process of rendition of returns and to acquaint participants of the changes made in the returns format. The need for accurate and timely returns cannot be over emphasized as the returns form the basis for the global picture of the sub_sector.

Consolidated figures derived from monthly returns submitted by MFBs are sent on regular basis to Research and other departments of the CBN. It is also made available to multilateral Institutions. It therefore follows that only credible figures should be submitted to the CBN and NDIC. At this time of our national development and in line with our vision to become one of the best 20 countries by 2020, we cannot afford to present misleading returns which invariably results in feeding the public with unreliable data.

Commending the apex bank for the innovation in the rendition of returns, the Chairman, Lagos State chapter of the National Association of Microfinance Banks, Mr. Olufemi Babajide, said the assigned codes enables MFBs to be linked to the CBN’s website.

“Rendering our monthly returns online saves us time and allows us make quicker decisions. We can also process and access data promptly, and it is far better than the manual renditions that we used to do.”

Agreeing that monthly rendition of returns is a statutory obligation of MFBs, the Managing Director of Meridian MFB, Mr. Innocent Ezema, said the codes are used to identify the MFBs and for their returns to be accepted for analysis by the CBN.

“This method makes it easier for the regulatory bodies to keep tab on us because it would be difficult for any bank to falsify their returns because every step must balance before you can move to the next step.”

Consequently, all licensed MFBs are expected to download the list and complete their monthly returns using the codes assigned to them and forward same to the CBN as directed on or before the 14th of the next month.