October 05, 2009

The Central Bank of Nigeria (CBN) has ruled out the possibility of injecting bailout funds into distressed microfinance banks. The apex bank has also commenced target examination of the banks to ascertain their financial health.increasing widespread incidence of illiquidity in the microfinance banking subsector, the CBN recently held a closed door meeting with chairmen and chief executives of microfinance (MFB) banks where it told them there would be no bailout for any of them having liquidity problem.

According to sources at the meeting, the Director, Other Financial Institutions Department (OFID), Femi Fabanwo who chaired the meeting categorically stated that the CBN would not bailout any distressed MFB. According to sources, the CBN director said that the apex bank has begun to conduct target examination of microfinance banks. He was quoted to have said, “We have target-audited 58 MFBs in Lagos and it is unfortunate that a good number of them are in a very bad state.