The Secretary of the Association of Microfinance Banks, Central Bank of Nigeria (CBN) North-central Zone, Tsado Daniel has disclosed that the apex bank’s hammer fell on nine microfinance banks in Niger State.
Daniel said the banks fell short during the regulation exercise carried out by the CBN.
While making known that there were 34 microfinance banks in the state before the CBN’s action, Daniel enjoined the management and staff members of the banks that escaped the CBN hammer “to adhere strictly to the rule of the game”.
Hajia Hassana Mohammed, a Representative of the CBN in Minna, while speaking on the failure of the banks said insider abuse is another huge factor that contributes to the failure of microfinance banks across Nigeria.
Hajia Mohammed advised beneficiaries of loan facilities to stop converting the money to marry more wives or to other unprofitable ventures.
“Until we stop using business money and loans to get married and buy clothes, businesses in the country will not progress,” she added.
Nairametrics had reported that CBN hammer may fall on some finance houses in Nigeria.
In a released made available to the public, the apex bank had made known its intention to revoke the operating licenses of 182 financial institutions operating in the country.
CBN announced this barely a week after its revoke Skye Bank’s operating license.
The 182 financial institutions which according to the apex bank, cut across different states of the country include – 154 microfinance banks; 6 primary mortgage banks, and 22 finance companies.
CBN said 62 of the microfinance banks had already closed shops; 74 became insolvent; 12 were terminally distressed; while six voluntarily liquidated.
The CBN listed the primary mortgage banks for revocation as Accord Savings and Loans Limited in Lagos that failed to recapitalise; and Ahocol Savings and Loans Limited in Anambra (state government-owned) that closed shop.
Other mortgage banks for revocation are Trans Atlantic Savings and Loans Limited in Bayelsa (state government-owned) that became insolvent; Royal Savings and Loans Limited in Delta State that also closed shop; Amex Savings and Loans Limited in Lagos that failed to recapitalise; and Supreme Savings and Loans Limited also in Lagos that closed shop.
The CBN disclosed that eight finance companies voluntary liquidated; 13 failed to recapitalise; while one became insolvent.
Until the regulatory body, which is the CBN, make sure they do their job well to monitor the operations of these Financial Institutions, there will not be any stability. Also, insider related loans should be discourage or reduced to the barest minimum, we will not have financial institutions that can stand the test of time in the Nigerian economy.