Financial Expert, Chief Etukere Reassures Depositors Of Funds’ Safety In Microfinance Banks
In the wake of recent federal government revocation of licenses by operators of microfinance banks in Nigeria, renowned finance expert, Chief (Elder) Amb. Nuadum Dorka Etukere, has stepped forward to allay the fears of depositors and assure them of the safety and stability of their funds.
With the increasing number of microfinance banks facing regulatory actions, concerns have been raised about the potential impact on the depositors’ funds and the overall stability of the microfinance sector.
However, speaking in the popular radio program, Point Blank on Super Fm 93.3 on Saturday, Chief Etukere addressed the concerns and provided valuable insights.
As an experienced finance expert, Etukere who is the Managing Director/CEO of Nkpolu UST Micro Finance Banks Ltd as well as Chairman, National Association of Micro Finance Banks, Rivers State, acknowledged the distress caused by the license revocations but emphasized the importance of understanding the underlying factors.
He explained that while the Central Bank of Nigeria (CBN)’s actions indicate serious shortcomings on the part of certain microfinance banks, it is crucial not to generalize these issues to the entire sector.
“First and foremost, the micro finance banks are licensed by CBN and we have the regulations guiding our operations. Before now, what we used to have was Community Banks”, he explained.
“In 2019, the CBN came up and informed us that N20m cannot run a micro finance bank effectively. That we should go back and recapitalize. But because of Covid-19, we were given some break.
“So, the revocation of licenses is mainly because of the recapitalization exercise. When the National Association of Micro Finance Banks intervened, CBN said we should recapitalize for the Unit, N200m; for the State, N1 billion and for the National, N5billion.
But with another intervention from us, the CBN re-categorized as follows: Unit: Tier one (those within the urban
areas).recapitalized to N200m while those in the rural areas (Tier 2) recapitalize with N50m”, he said, adding that of the 179 Microfinance banks axed by the CBN, 6 are in Rivers State.
Furthermore, he advised depositors to exercise caution and prudence in selecting the microfinance banks they entrust their funds with, advising that conducting due diligence, such as reviewing the bank’s financial statements, track record, and compliance history, can significantly reduce the risks associated with depositing funds.
