NEWS WIRE: Nigeria: Microfinance Banks Seek Central Bank’s Intervention On Cheque Clearing

Source: allAfrica.com.

Original article available here:

LAGOS, November 5 – Worried by the delay in the clearing of cheques through corresponding banks, microfinance banks have enjoined the Central Bank of Nigeria (CBN) to appoint one of them to act as clearing house.

Microfinance operators explained that cheque clearing through corresponding banks was one of the factors that hindered the growth of community banks in the country.

They pointed out that apart from the fact that commercial banks are their competitors, appointment of one of the big micro finance banks to clear cheques on behalf of others would help to reduce the delay encountered by operators in the process.

Chairman of Alstar Microfinance Bank, Chief Olutayo Adenekan. described cheque clearing through corresponding bank as unfair, adding that it was one of the major factors that hindered the development of community banks in the country.

“There is need for government to intervene on the issue of cheque clearance for microfinance banks, asking the institution to clear their cheque through corresponding banks is unfair and it is one of the factors that militate against community banks development in the country,” he added.

He explained that commercial banks to some extent are competitors of microfinance banks, hence, it was not appropriate for them to be the institution to clear their cheques.

He further pointed out that for microfinance banks to make a meaningful impact on the growth of the nation’s economy, various governments at all level must initiate programme that would encourage the flow of funds into the sub-sector.

Adenekan stated that the banks were targeted for grass root development, adding that such institutions would yield the expected result if the government encourages the smooth operations of the system.

He listed lack of funds, low patronage, especially from the government as well as competition from commercial banks as major challenges confronting the sub-sector.

He said “the new microfinance policy stipulates that one per cent of total budget be injected into microfinance. What we are saying is that the government should ensure that the policy is being implemented by all the tiers of government.’

The chairman of Alstar microfinance said that with adequate free fund, the sector would be able to overcome these challenges facing the system.

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