Customers throng microfinance banks

Many depositors yesterday thronged branches of some microfinance banks (MFBs) in Abuja in the wake of last weekend’s decision of the Central Bank of Nigeria (CBN) to wield the big stick against erring operators.

The Central Bank, through its deputy governor, Financial Systems Stability (FSS), Kingsley Moghalu, had announced the immediate revocation of the operational licences and closure of 224 banks declared either “terminally distressed” or “technically insolvent.”

Mr. Moghalu, who said the affected banks failed a recent target examination administered in conjunction with the Nigeria Deposit Insurance Corporation (NDIC) for the 820 registered MFBs in the country, to determine their ability to meet matured obligations to depositors, did not, however, name the other 596 that were adjudged successful.

About 62 of the sanctioned MFBs are in Lagos; 17 in Anambra; 15 in Rivers; 13 each in Delta and Imo; 12 in Ogun; 10 in both Abia and Edo; 5 in Enugu; 7 each in FCT and Osun; 8 each in Oyo, Kaduna, and Kogi; 4 in Ondo; 3 in Akwa Ibom and Ekiti; 2 each in Cross River, Benue, Niger, Kebbi, Plateau, and Bayelsa; one each in Adamawa, Bauchi, Sokoto, Jigawa, Taraba, and Kwara.
The Central Bank’s decision not to disclose the MFBs in good standing across the country, ostensibly created panic among the people, who were anxious to know the true standing of their various bankers.

‘Don’t want to take chances’
During a visit to one of the MFBs located in the Garki area of Abuja, some of the depositors interviewed said they would not want to take chances with their funds.

It was gathered that the bulk of those who thronged their various banks were more anxious to get as much as they could from their accounts to forestall a repeat of the experience with the distressed commercial banks two years ago.

“As early as 8 a.m. today (Monday), we have been inundated with several of our customers who turned up to demand withdrawals from their accounts, apparently in panic response to the decision of the CBN to announce the closure of some of the microfinance banks”, one of the clerks said.

“We have not been able to do anything else than attend to customers who have come to withdraw money, despite notices that we are not affected,” she added.

Head, communications, of the CBN, Mohammed Abdullahi, in a text message response said yesterday that the bank was not considering the publication of the names of the successful MFBs, to reassure depositors.

“Any depositor who has any doubt whether his or her bank is affected should go to where he or she has the account to confirm. If the names of the banks that have been sanctioned have been published and people claim they do not see, what is the guarantee that they would see if the list of the successful ones are published,” Mr Abdullahi asked.

Meanwhile, the CBN has indicated that it is not considering outsourcing the regulation of the microfinance banks, pointing out that though the challenge of monitoring the operations of almost 900 MFBs in the country may appear almost beyond its capacity, the function would remain within its internal structure.

Very wonderful

The approach of the CBN/NDIC in this case is very unfortunate. It belies any claim to professionalism, economic interest and commitment to the development and sustenance of the banking habit. In addition, it's a wicked display of insensitivity to the plights of the depositors and the employees of the affected micro banks. In fact, I was forced to ask an insider friend yesterday if the CBN/NDIC team had no better way of executing their oversight functions without creating greater problems than that they set out to solve. Very sad indeed!