CONCEPT OF MICRO-FINANCE BANKS (M.F.B.S) – GUIDELINES PROVIDED

Individuals, group of individuals, community development associations, private corporation entities or foreign investors, can establish M F B S. Significant ownership diver signification shall be encouraged to enhance good corporate  government of licensed M F B S.

No individuals group of individuals their provides corporate entities and or their subsidiaries shall establish more than one MFBS linder a  different or disguised name.

Section 6 of the frame work deals with measure and instruments for establishment of micro finance bank (MFBS). 

The guideline provided for the establishment of two categories of micro finance banks. MFBS namely.

(a) Micro finance bank licensed to corporate as a unit bank within a local government area with a minimum paid-up capital/share holder’s fund of N20 million

(b) Micro finance bank licensed to corporate in a state with a minimum paidup capital/share holders fund of N million.

Section 7 of the guideline outline organic path for the MFBS A unit micro finance bank shall be allowed to extent its ranch network to other local government areas in the state thereby transforming to state bank, provided it covers at least two. Third of the local government areas of the state and subject to prescribed prudential requirement and availability of minimum capital fund of N20 million for each branch similarly a state micro finance bank can organically grow into a National bank by establishing branches in other state, provided that it opens branches in at least two of the local government areas of the state of its current operation and meet the presibed prudential requirements including N20 million paid-up capital shareholders funds for each branch. A micro finance bank however may wish to start operations as a state bank from the beginning without organically growing from a unit bank, subject to the provision of N1 million capital base (CBN 2005).

Section 8 of the guideline provides that a micro bank can be established by individual group of individuals,communities development association, private corporate bodies or individuals or groups shall not establish more than one micro finance bank order a different or disused name .

Section 9   provides for partienation of existing financial in institution in micro finance activities. Universal banks currently engaging in micro finance operation shall be required to either set up a subsidiary for that purpose, or a department for subject to the provision of the M F B S

REGULATORY AND SUPERVISORY GUIDELINES

Section 9.2 of the guidelines provides that all existing licensed community bank shall transform to unit micro finance bans on meeting the N20 million minimum capital and other conversion requirement within a period of 24 months from the date of approval of this guideline (Dec 2005).

Any community bank able to meat the specifics capital requirement of N1million can apply for licensed to operate as a state MFB.