The National Association of Micro Finance Banks (NAMB) on Monday in Abuja said government’s stringent regulations were limiting the operations and growth of micro finance banks in the country.
The Executive Secretary of the association, Mr Kabir Yar’Adua, told the News Agency of Nigeria (NAN) that the Central Bank of Nigeria was imposing too strict guidelines on Micro Finance Banks (MFBs).
“MFBs are one of the most heavily regulated sub-sectors and I think there should be a limit to these regulations.
“If you look at what an individual promoter is supposed to do before establishing MFB, you will see the extent of the regulations.
“ For you to set up MFB, your Managing Director must be an ex-banker and you must have two other ex-bankers among the board members of the bank.
“ You need to employ an IT staff, an Internal Auditor for cheques and balances among other requirements’’, he said.
Yar’Adua explained that MFBs were not allowed to take deposits from any tiers of government or engage in foreign exchange, yet they lend money to civil servants and the general public.
He said the aspect of accepting deposits from any tiers of government posed a very great challenge to the sub-sector, thus limiting its effort to empower the people.
“These commercial banks collect the money deposited and loan it to people who do not really need it, at higher interest rates.
“The federal government should consider allowing MFBs to accept deposits at least from the local governments.
“The government ought to look at us as the bank of the poor as they look at the commercial banks as the bank of the rich’’, Yar’Adua said.
He called on the government to expand the operations of Asset Management Corporation of Nigeria (AMCON) to extend the services it rendered to the commercial banks to the MFBs.
Yar’Adua said the government could also create a body like AMCON for the benefit of MFBs.
“If a commercial bank is going to fail, AMCON quickly intervenes and rescues it, the MFBs needs that kind of services or a similar body like that.
“The MFBs have the same licence as the commercial banks and they are both supervised by the CBN; so why can’t AMCON cover the MFBs as it does for the commercial banks?’’
Yar’Adua said Germany had a body like AMCON that sees to their MFBs hence none had failed for about 40 years of operation.
“Ghana has a mini central bank that oversees their rural banks just as AMCON does for the commercial banks in Nigeria.
“Whenever any of the banks experiences a problem, the mini central bank detects it through the regular returns deposited by the banks and intervenes immediately.
“But in Nigeria, our regulators will wait, even if they get this data from the MFBs every month until the MFB is dead and they bury it.
“This issue of regulation can also be tackled if the government allows MFBs to accept deposits from local governments and also reviews some of the policies guiding the MFBs’’, Yar’Adua said.
