The Central Bank of Nigeria (CBN) has hiked the capital requirements for the operation of micro-finance banks in the country.
This was revealed in a circular by the CBN on Monday where it noted that the move was part of efforts to address inadequate capital base in the sub-sector.
According to the apex bank, the minimum capital requirement for unit and state microfinance banks is now N200m and N1bn in that order.
This is a 900 percent raise from N20m and N100m respective with that of national microfinance banks jumping by 150 percent to N5bn from N2bn.
Also, the bank said the development takes immediate effect for new applications with existing banks following the order with effect from April 1, 2020.
“The CBN has reviewed the state of health of the sub-sector and is of the view that microfinance banks, as presently constituted, would be unable to meet the critical targets set out in the Microfinance Policy, hence the need for specific reforms to strengthen the sub-sector and reposition microfinance banks towards improved performance,” the CBN added.
“To meet these requirements, existing microfinance banks are expected to explore the possibility of mergers and acquisitions and/or direct injection of funds.
“The Revised Regulatory and Supervisory Guidelines for Microfinance Banks, Code of Corporate Governance for Microfinance Banks and sector-specific Prudential Guidelines for Microfinance Banks would be issued in due course.”