The Central Bank of Nigeria says the revised categories of MicroFinance Banks, which give them up to April 2020 to recapitalise, is to ensure their continued operations in the economy.
The CBN said this in a circular, titled: “Re: Review of Minimum Capital Requirements for Microfinance Banks in Nigeria,” signed by Kevin Amugo, Director of the Financial Policy and Regulation Department, and posted on its Website.
Amugo explained that such continued operations would be in the rural, unbanked and underbanked areas of the economy.
The New Agency of Nigeria reports that the CBN has increased the minimum capital base of national MFBs to N5 billion, while that of state was jerked up to N1 billion.
However, prior to the circular, the minimum capital base for national and state MFBs was N2 billion and N100 million.
The Director said: “Further to our circular dated October 22, 2018 on the above subject, the CBN has revised the categories of microfinance banks.”
Amugo said the measure would ensure continued operations of microfinance banks in the rural, unbanked and underbanked areas of the economy.
He said: “Accordingly, Tier 1 unit microfinance banks shall operate in the urban and high-density banked areas of the society and Tier 2 unit of microfinance bank shall operate only in the rural unbanked or underbanked areas.
“Following from above, a requirement for categories of microfinance banks has also been revised.”
The apex bank said the Tier 1 unit microfinance would operate with a minimum capital requirement of N200 million and Tier 2 with N50 million.
The CBN also reviewed the time frame by which the different categories of microfinance banks were to recapitalise.
It said: “To aid the process of recapitalisation, all microfinance banks shall be required to comply with the following:
“Tier 1 microfinance banks shall meet a N100 million capital threshold by April 2020 and N200 million by 2021.
“Tier 2 unit microfinance banks shall meet a N35 million capital threshold by April 2020 and N50 million by April 2021.
“State microfinance banks shall increase their capital to N500 million by April 2020 and N1 billion by April 2021 and National microfinance banks shall hold a capital of N3.5 billion by 2020 and N5 billion by April 2021.”
The director noted that the circular superseded the one earlier issued to the microfinance banks on October 22, 2018.