CBN avows strength of microfinance banks …says shutdown reports are bogus, malicious

The Central Bank of Nigeria (CBN) has stated that the state of microfinance banks in the country remained strong and without trace of panic in the financial system. The apex bank was reacting to a newspaper report (not THE CITIZEN) insinuating that about 600 Microfinance Banks (MFBs) were facing imminent shutdown. The report had said that sources in the apex bank confided that 'many of the MFBs have voluntarily shut down. Some are looking into the merger and acquisition deals as advised by the CBN. By the time the CBN looks into their 2013 accounts, it will take decisive actions on the MFBs. The CBN dealt with a number of them last year when it looked into their 2012 accounts.' It also estimated that about 600 of the over 800 microfinance banks presently in the country will be pruned down. But the Director of Other Financial Institutions Supervision Department (OFISD), CBN, Olufemi Fabamwo, lamented that the bogus and spurious claims made in the report defied the usual professional ethics of factual and balanced reporting, which are the hallmarks of finance and business journalism. He therefore, dismissed the story as totally untrue and misleading, reaffirming unequivocally that the CBN is generally satisfied with the state of the microfinance industry and the financial condition of the microfinance banks. According to him, the story of the imminent shutdown of 600 MFBs should be ignored and urged journalists to always crosscheck and confirm their story with CBN's Corporate Communications Department or any other relevant authority before publishing. Fabamwo further stated that such a callous and rash misinterpretation of the policy direction in the microfinance sub-sector could obviously result in the de-marketing of microfinance banks and thus, undermine public confidence, which is capable of precipitating panic withdrawals by depositors and investors in the MFBs. He therefore urged members of the public to ignore and disregard the false story, noting that the microfinance sub-sector has been effectively regulated by the CBN and jointly supervised by the CBN and the Nigeria Deposit Insurance Corporation (NDIC). He added that all MFBs are examined at least once a year, while some are examined more than once, depending on the exigencies of the situation, with follow-up visits to ensure that examiners' recommendations are implemented and corrective actions taken by the operators of the MFBs to sustain stability in the microfinance space.