The Central Bank of Nigeria (CBN) has been asked by the House of Representatives to suspend the microfinance banks recapitalization policy.
The lower chamber urged the regulator to postpone the deadline of the policy until the economy is stabilized.
The resolution was sequel to a motion moved by Saidu Abdulahi (APC, Niger), on Wednesday during plenary.
Microfinance recapitalization policy
The CBN had in a circular on March 8, 2018, initiated the recapitalization of microfinance banks, which gives banks a timeline to attain certain minimum capital requirements.
According to the CBN, tier 1 Unit microfinance banks must meet N100 million capital threshold by April 2020 and N200 million by April 2021. Tier 2 Unit microfinance banks must meet a N35 million capital threshold by April 2020 and N150 million by April 2021.
Also, state microfinance banks must increase their capital to N500 million by April 2020 and N1 billion by 2021. While national microfinance banks must hold capital of N3.5 billion by April 2020 and N5 billion by April 2021.
However, due to the outbreak of COVID19, the apex bank in another circular in 2020, extended the timeline to 2022. Although, the deadline for the first phase is due in April 2021.
PREMIUM TIMES had reported that 70 per cent of microfinance banks risk going out of business due to the impact of the policy.
Mr Abdullahi said the CBN needs to extend the April 2021 deadline due to the impact of COVID-19 and the fact that Nigeria just emerged from a recession.
He warned that folding up of microfinance banks “will aggravate unemployment, compound the challenges of insecurity, youth restiveness, poverty, apathy and hopelessness across the country.”
Consequently, the lawmakers resolved that the Committee on Banking and Currency should interface with the CBN, to find a workable solution to the challenges associated with the recapitalization of the MFBs in Nigeria, and report back within four weeks for further legislative action.
When the motion was put to vote by Speaker Femi Gbajabiamila, the “ayes” had it.
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