CBN revokes licence of 179 MfBs, expert weighs implications

THE Central Bank of Nigeria (CBN) has revoked the operating licences of 179 microfinance banks (MfBs), four primary mortgage banks (PMBs) and three finance companies, as disclosed by the regulatory body in two separate gazettes it released on Tuesday, May 23.

The impact of these revocations would affect the larger society, a lecturer at the Department of Finance, University of Lagos, Abu Noruwa, told The ICIR.


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Before the revocation, the CBN would have found out that the operators were not complying with the rules and regulations, and the owners of the banks could have been diverting funds for personal use outside the purpose of the MfB operations, Noruwa asserted.

“Some creditors may lose certain parts of their funds [money]. And the debtors, when they are aware of the revocation, may default repaying the loans granted them,” Noruwa said.

The finance expert pointed out that the revocation could reduce the level of investment in small and midsize enterprises (SMEs) and the availability of access to funds, which could lead to a reduction in productivity for the larger society.

He explained, “If the CBN had not revoked those licences, it could affect the larger society and lead to lack of confidence in the establishment of MfBs.”

In the first gazette dated May 22, the apex bank revoked the operating licences of 47 microfinance banks.

In the second gazette dated May 23, the apex bank revoked the operating licences of 132 MfBs, four PMBs and three finance companies.

The regulatory authority said the 47 MfBs had either remained inactive, insolvent, failed to render returns, closed shop, or ceased to carry on the type of banking business for which they were licensed for more than six months.

It added that various steps taken to halt their persistent failure to carry on business had failed.






     

     

    The CBN said the penalised financial institutions had ceased to practise the type of business for which their licences were issued for a continuous period of six months, among other reasons.

    According to the CBN, the institutions’ activities contravened the Banks and Other Financial Institutions Act (BOFIA), 2020 and the Revised Regulatory and Supervisory Guidelines for Microfinance Banks in Nigeria.

    The three affected finance houses are HHL Invest & Trust Limited, TFS Finance Limited, and Treasures & Trust Limited, while Resort Savings & Loans, Safetrust Mortgage Bank, Adamawa Savings & Loans and Kogi Savings & Loans are the four mortgage banks, besides the long list of the 179 MfBs.

    See the list here

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