MFBs want CBN to compel banks to clear cheques

Source: The Nation Newspaper Published:Tuesday, January 26th, 2010

Microfinance Banks (MFBs) in Nigeria at the weekend urged the Central Bank of Nigeria (CBN) to compel Deposit Money Banks (DMBs) to clear all cheques emanating from MFBs.

The MFBs also sought the use of short codes to replace the names of correspondent banks on MFBs’ cheques.

They made their position known in communiqué issued on the 4th edition of the Microfinance conference, which CBN organised in Abuja .

The MFBs however pledged to adopt tested risk management practices that would cover strategic, financial and operational risks.

They also said that since the cost of executing financial literacy and consumer protection was high, the CBN should take up the role as part of its developmental programmes..

While urging the apex bank to encourage government to intensify efforts in addressing the problems of infrastructural development, they said, "Financial literacy and consumer protection are critical to the sustainable development of the microfinance sub-sector; inadequate infrastructure negatively impact on the growth of the MFBs.

"There is need for the passage of bills and signing into law the one per cent annual budgetary allocation by the state and local government and this should be disbursed through the MFBs."

The MFBs also pointed out that to grow the microfinance sub-sector; there was an urgent need to encourage government agencies to allow them collect taxes and pensions since they (MFBs operate at the grassroots.

They however commended the ongoing certification programme of the MFB adding, "The microfinance programme is a laudable initiative which must be sustained and vigorously implemented to enhance the human capacity of the operators. However, the CBN should expedite action in issuing final licence to qualified MFBs, because those having provisional licence are considered not credible."

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