Multiple borrowing cripples operations of Micro Finance Banks- Official

Some customers take loans in different banks.

The Chief Operating Officer of Fortis Micro Finance Bank (MFB), Jero Omare-Ogah, says multiple borrowing by customers remains a major challenge to the survival of the MFBs in the country.

Mr. Omare-Ogah told the News Agency of Nigeria in an interview in Abuja on Thursday that the development was worrisome, in spite of the Central Bank of Nigeria’s efforts at checking the trend by setting up the Credit Bureau.

The Credit Bureau was set up by the CBN to check the financial status of potential borrowers.

“The issue of multiple borrowing is a major problem in the industry. Customers go from one MFB to the other to access loans and it becomes a problem when it is time for payment.

“The high number of bad debts recorded by MFBs have to do with the attitude of not repaying loans by borrowers.”

Mr. Omare-Ogah called on the CBN to put in place a re-financing institution that could re-finance the bad debts of MFBs, pending when a legal system in that regard was instituted.

He explained that the duty of a refinancing institution would be to refinance bad loans and the borrower would repay the money over a period of time with interest, to sustain the institution.

According to him, another way to minimise the occurrence of multiple borrowing is by asking customers to provide bank statements from other banks they do business with.

“This way, if a customer has already taken a loan somewhere, it will be reflected in the bank statement and we will know.”