The Central Bank of Nigeria, CBN, has revoked the operating licences of 46 microfinance banks across the country for failing to comply with regulatory requirements.
The apex bank announced the decision in a statement issued on Wednesday by its Acting Director of Corporate Communications, Hakama Sidi-Ali, stating that the revocation takes immediate effect.
According to the CBN, the action was taken in line with its powers under Sections 12 and 13 of the Banks and Other Financial Institutions Act (BOFIA), 2020.
CBN explained that the affected microfinance banks failed to meet the conditions required to continue operating as licensed financial institutions.
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The CBN said the decision followed the identification of one or more regulatory infractions, including insufficient assets to meet liabilities, closure of operations without the approval of the apex bank, prolonged inactivity and cessation of financial intermediation, failure to commence business within 12 months of receiving a licence, and failure to maintain the required minimum capital unimpaired by losses.
Explaining the rationale behind the move, the apex bank stated:
“The revocation of the licences is part of the bank’s ongoing efforts to safeguard the stability of the financial sector, protect depositors, and ensure that licensed institutions comply with current laws and regulatory requirements.
“The Central Bank of Nigeria remains committed to promoting a safe, sound and resilient financial system and will continue to take appropriate supervisory and regulatory actions, where necessary, to maintain public confidence in the Nigerian financial system.”
Putting The Arguement In Proper Context:
The CBN’s latest action is part of a wider clean-up of what some analysts call “zombie” MFBs that had been inactive for years:
For instance, CBN’s May 22-23, 2023 gazette revoked 47 MFBs plus 132 others, making 179 MFBs in total.
The official reason: they had “remained inactive, insolvent, failed to render returns, closed shop, or ceased to carry on… for more than six months” in breach of BOFIA 2020.
The same gazette covered 179 MFBs, plus four Primary Mortgage Banks, (PMBs) and three finance companies whose licences were revoked for also six months of inactivity, failure to meet licence conditions, or non-compliance with BOFIA 2020.
The analysts and the Nigeria Deposit Insurance Corporation (NDIC) reports had confirmed then that many had not operated for years
Infact, on Nov 12, 2020, CBN first revoked 42 MFBs for same breaches. NDIC said some had “closed in October” 2020 and belongings evacuated.
In 2010, CBN revoked 224 MFBs, using the same template, being used now, because they “had closed shop for six months or more.”
Specifically, NDIC’s position in 2011 was, “a majority of microfinance banks… have closed shop” and letters to them were “returned undelivered, indicating that they are no longer in operation”.
Many analysts had argued then that most of the affected banks were already dead before CBN acted, but that BOFIA’s structure allowed them to sit on a licence without immediate sanction.
Analysts’ Direction:
Some of the analysts blame lapses in BOFIA and supervisory laxity.
According to one of the analysts, because BOFIA 2020 allows new MFBs to operate for long periods before CBN is notified of closure/inactivity, operators capitalise on these lapses.
“They come in, clean out withing six months and become dormant only to be pacifying the unsuspecting customers.”
To another analyst, the review of BOFIA to shorten the grace period and for “more and close supervision” by CBN, among others are panacea to the recurrence of the fleecing of hapless customers.”
Some other analysts see the possibility of CBN acting on the 2023/2026 banks that went dormant in 2020-2022, and some even earlier, typified by repetitions and name changes on the present list, or that are part of the 2023 P&A takeovers.
NDIC is said to be presently in “final phase” to dissolve 89 of the 179 defunct MFBs/PMBs after new owners took over assets/liabilities under Purchase & Assumption. The 89 defunct banks were part of the May 2023 revocation.
Affected MFBs:
S/NO MFB CATEGORY STATE
1 Minji-Se Churchill MFB Tier 1 Rivers
2 Merchant MFB Tier 2 Abia
3 Janmaa MFB Tier 1 Kwara
4 Busu MFB Tier 2 Niger
5 Gold MFB Tier 1 Lagos
6
Zain MFB (foremerly Dawakin Tofa MFB) Tier 2 Kano
7 Bompai MFB Tier 1 Kano
8 Ajwa MFB (Formerly Gezawa) Tier 2 Kano
9 NOW NOW DIGITAL MFB Tier 2 Kano
10 Crystabel Microfinance Bank Tier 1 Bayelsa
11 Chanelle MFB State Lagos
12 Abia SME MFB Tier 1 Abia
13 Kamba MFB Tier 2 Kebbi
14 Iwade MFB Tier 2 Ogun
15 Winview MFB Tier 1 Abuja
16 Zuru MFB Tier 2 Kebbi
17 Minjibir MFB Tier 1 Kano
18 Shanono MFB Tier 2 Kano
19 Sumaila MFB Tier 2 Kano
20 Rimin Gado MFB Tier 2 Kano
21 Mwaghavul MFB State Plateau
22 Sycamore MFB Tier 2 Kano
23 TOFA MFB Tier 2 Kano
24 Safegate MFB Tier 1 Lagos
25 Creekline MFB Delta Tier 2
26 Bestar MFB Tier 1 Oyo
27 Livingspring MFB Tier 1 Cross River
28 Apple MFB Tier 2 Ogun
29 Stanford MFB State Uyo
30 Frontline MFB Tier 2 Anambra
31 Zafec MFB Tier 2 Kaduna
32 Supreme MFB Tier 1 Lagos
33 Bejin-Doko MFB Tier 2 Niger
34 Kanopoly MFB Tier 1 Kano
35 Bellbank MFB formerly
Tsanyawa Tier 2 Kano
36 Yeneng MFB Tier 2 Plateau
37 Creditville MFB Tier 1 Lagos
38 MBAG MFB Tier 1 Lagos
39 STRAIGHT SAHARA MFB Tier 1 Benue
40 OURPASS MFB Tier 2 Ondo
41 VERDANT MFB Tier 1 Lagos
42 BASAWA MFB Tiern2 Kaduna
43 CASHA MFB Tiern2 Abuja
44 ESTEEM MFB Tier 2 Kano
45 ENTERPRENEUR MFB Tier 1 Lagos
46 AVANTUS MFB Tier 2 Osun