CBN warns it will shut down as many as 154 microfinance banks facing solvency and liquidity problems

AS many as 154 microfinance banks across the country face the prospect of being shut down by the Central Bank of Nigeria (CBN) because they are struggling to survive due to a host of problems including liquidity and solvency.

Established to help petty traders and artisans raises capital to fund their businesses, microfinance banks were hailed as the future engines of economic growth in Nigeria. However, with the expansion of such banks, which are mainly state-owned, many of them have fallen into hard times and are now unable to fulfil their obligations.

Consequently, the CBN has given notification that it could revoke the operating licences of 154 of these banks. According to the CBN, 62 of microfinance banks had already closed shop, 74 had became insolvent, 12 were terminally distressed,  while six voluntarily liquidated.

It added that six mortgage banks and 22 other finance companies that were also struggling, would receive similar notification too. A CBN spokesman listed the top mortgage banks under the threat of revocation as Accord Savings and Loans in Lagos that failed to recapitalise and Ahocol Savings and Loans in Anambra State that closed shop.

Other mortgage banks under threat are Trans Atlantic Savings and Loansin Bayelsa State that became insolvent, Royal Savings and Loans in Delta State that also closed shop, Amex Savings and Loans in Lagos that failed to recapitalise and Supreme Savings and Loans also in Lagos. According to the CBN, eight finance companies voluntary liquidated;,13 failed to recapitalise while one became insolvent.