By Amaka Abayomi

With the expiration of the June 2011 deadline given to microfinance banks (MFBs) by the Central Bank of Nigeria (CBN) to automate their monthly returns to the CBN, the apex bank has expressed delight over the 70 per cent compliance recorded, though a few are yet to comply due to some challenges.

Due to the challenges of 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, and with the success of a pilot test by the CBN of the electronic rendition in January 2011, MFBs were given till June 2011 to automate their monthly returns process as the CBN would stop receiving hard copies of the returns.

As operators in the financial industry, MFBs are expected to provide credible and acceptable financial information to the regulatory authorities, the CBN was compelled to design a system for electronic rendition of MFBs’ monthly returns and assign codes to individual MFBs with which they are expected to complete their electronic monthly returns so as to forestall the identified lapses and enhance their effective supervision by the regulatory bodies.

But with the expiration of the June deadline, coupled with the CBN’s threats to take punitive actions on any MFB that fails to comply with the directive, Vanguard sought to find the level of compliance of operators and the apex bank’s next line of action.

According to a source close to the CBN, compliance has been impressive, but due to some imminent challenges of high cost of the FinA software and lack of IT knowledge, some MFBs are yet to commence electronic renditions.

“The CBN has recorded about 70 per cent compliance with the on-line rendition of returns though it found out that the remaining 30 per cent encountered challenges that borders on the cost of the IT software, making the CBN to extend the deadline to September 30 to allow those yet to comply to do so.

“Since their major reason was the high cost of the software, the CBN met with a software service provider that agreed to make the software available at a much cheaper rate. With this, it is expected that those MFBs that are yet to comply have to take advantage of this offer and commence electronic renditions because the CBN would not treat them with kids gloves after September 30.”

Towing the line of the apex bank in ensuring that MFBs can afford the FinA software with which to render their returns, the Lagos State Chairman, NAMB, Mr. Olufemi Babajide, said the state chapter has concluded arrangements with a software provider to sell the software at a cheaper rate.