Umuchinemere Pro-Credit Micro Finance Bank (UPMFB) Supports CBN's New Capitalization Policy for Microfinance Banks

Umuchinemere Pro-Credit Micro Finance Bank (UPMFB) Supports CBN's New Capitalization Policy for Microfinance Banks

One of the fast growing blue chip microfinance banks in Nigeria, Umuchinemere Pro-credit Micro Finance Bank (UPMFB) Nigeria Limited, Enugu, has given its support to the Central Bank of Nigeria's new capitalization policy of ₦100 million for microfinance banks, but with a call for a capitalization differential between the microfinance banks in the cities and the ones in the rural areas. Chairman of UPMFB, Rev. Prof. Obiora Ike, a Roman Catholic prelate, expressed the bank's support for the CBN's new capitalization policy for microfinance banks when he spoke in Enugu on new developments in the microfinance sector of the country's banking industry.

A Press Statement from the Public/Media Relations unit of the bank, signed by the official in charge of the unit, Sir Abuchi Anueyiagu, credited Monsignor Ike as having seen the increase in microfinance banks shareholding from ₦20 million to ₦100 million as reasonable. "If the CBN Governor says microfinance banks your ₦20 million shareholding should increase to ₦100 million, I think it's something reasonable", calling for differential between microfinance bank in the rural place and microfinance bank in the city.

The Umuchinemere Pro-credit Microfinance bank chairman said banks, including microfinance banks, must have enough equity of the promoters of the banks to take public funds otherwise they would use depositor's funds to settle bank's business, which he saw as wrong and unacceptable He declared,"They should have enough equity, so that when people ask for money they can give loans, and when people ask for their funds they can pay back the funds, and when there's crisis their shareholding portfolio is able to douse it".

However, Prof. Ike suggested that in the new capitalization policy for banks there should be a differential between microfinance banks in the rural areas and the ones in the cities, since the ones in the rural places do not have the same financial muscle with the ones in the cities because the big monies are not found in the villages.

"Therefore, there must be a method, and I think the CBN should be told to look at microfinance banks in the rural areas and ask them to stay on ₦20million or to go up ₦30 million or highest ₦40million, while microfinance banks in the major cities can go on ₦100 million, otherwise, all the microfinance banks in many rural areas will close, and that will be a catastrophe for access to the funds of the people in rural areas who do not have funds", the bank chairman requested.

The UPMFB chairman said though the distance between the regulatory bank and the microfinance banks was large and should be closed with an agency that would act on behalf of the CBN, it was important for the microfinance policy to be put in place, as it was important for the CBN to guide it.

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