MICROCAPITAL BRIEF: Central Bank of Nigeria (CBN) to Handover Debtors of Distressed Microfinance Banks to Economic and Financial Crimes Commission (EFCC) and Revoke Operating Licenses of Microfinance Banks That Have Closed Operations for More Than Six Months

An investigation by Vanguard, a newspaper in Nigeria, indicates that the Central Bank of Nigeria (CBN) is currently compiling names of individuals who have received loans from microfinance banks and have failed to repay those funds. A CBN source confirmed this to Financial Vanguard: “This is because there are some people who have taken loans from MFBs and have refused to pay back. So we would publish their names and hand them over to law enforcement agents to recover the loans. If there are some issues bordering on criminalities, we would report such to the appropriate quarters.”

The investigation also revealed that the central bank would revoke the operating license of MFIs that have closed banking operations for more than six months. “Those MFBs that on their own have already closed shop, there is a provision in BOFIA (Banks and Other Financial Institutions Act) that you can’t close your office from carrying out the purpose for which you are licensed for a period of six consecutive months or any six months within a twelve month calendar,” said the CBN source.

By Jay Kumar, Research Assistant

About Central Bank of Nigeria (CBN):

Central Bank of Nigeria (CBN) is Nigeria’s central banking authority, established in 1958. Some of the regulatory objectives of CBN as follows: to issue legal tender, to maintain the external reserves of the country, to promote monetary stability and a sound financial environment, and to act as a banker of last resort and financial adviser to the federal government.

Additional Sources:
1.) http://www.vanguardngr.com/2010/01/31/cbn-to-handover-debtors-of-distres

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

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