MICROCAPITAL BRIEF: Central Bank of Nigeria (CBN) Gives Provisional Approval for 121 New Microfinance Bank (MFB) Licenses

After announcing that Nigerian microfinance banks (MFBs) would have to fulfill stricter capital requirements in order to obtain licenses, the Central Bank of Nigeria (CBN) has begun to grant provisional approval for new licenses to approximately 121 out of the 224 MFBs whose licenses were revoked earlier this year. CBN spokesperson Malam Mohammed M Abdullahi mentioned the move came in response to many MFBs having improved their financial positions by increasing their capital reserves and loan recovery [1].

The new MFB requirements include a minimum capital base of NGN 100 million (USD 650,000) and NGN 2 billion (USD 13.1 million) for unit and state MFBs, respectively. These requirements are 400 percent and 100 percent higher than the NGN 20 million (USD 132,000) and NGN 1 billion (USD 6.6 million) capital requirements for existing licensed MFBs operating in the country. The 224 MFBs whose licenses were revoked will have until December 31, 2011 to fulfill these requirements [2].

About the Central Bank of Nigeria (CBN): Central Bank of Nigeria (CBN), established in 1958, is Nigeria’s central banking authority. As defined by the 1958 Act of Parliament that created CBN, its statutory mandates are as follows: “to issue legal tender currency; to maintain external reserves; to safeguard the international value of the legal tender currency; to promote monetary stability and a sound financial system in Nigeria; and to act as banker and financial adviser to the Federal Government.” As of July 2010, CBN reports total assets of NGN 7.37 trillion (the equivalent of USD 48.6 billion).

By Diana Baide, Research Assistant

[1] Peoples Daily. “CBN grants provisional approval for new licenses to 121 MFBs” by Musa Adamu, 22 October 2010

http://www.peoplesdaily-online.com/index.php?option=com_content&view=article&id=17704:cbn-grants-provisional-approval-for-new-licences-to-121-mfbs&catid=27:finance&Itemid=183

[2] MicroCapital. “MICROCAPITAL BRIEF: Microfinance Banks (MFBs) Whose Licenses Were Recently Revoked by the Central Bank of Nigeria (CBN) May Reapply Under Stiffer Requirements” by Witt Gatchell, 19 October 2010

https://www.microcapital.org/microcapital-brief-microfinance-banks-mfbs-whose-licenses-were-recently-revoked-by-the-central-bank-of-nigeria-cbn-may-reapply-under-stiffer-requirements/

MicroCapital. “MICROCAPITAL BRIEF: Central Bank of Nigeria Revokes Licenses of 224 Microfinance Banks” by Lindsey Shaughnessy, 1 October 2010

https://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-revokes-licenses-of-224-microfinance-banks/

MicroCapital’s Microfinance Universe profile: Central Bank of Nigeria

https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Central+Bank+of+Nigeria+(CBN)

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