For most small businesses, especially those in the bottom of the pyramid grappling with credit crunch, microfinance banks remain a veritable source of finance.
The Managing Director/Chief Executive Officer, Mainstreet Microfinance Bank Limited, a subsidiary of Skye Bank Plc, Mr. Adegoke Adegbami, who stated this, added that the SMEs had more opportunities in microfinance banks than in the commercial banks.
While commenting on the challenge of loan recovery, he said that some microfinance banks had to incur losses as a result of issues relation to due diligence and risk analysis.
A statement quoted him as saying, “The monitoring mechanism carried out by our loan recovery officers is very all right because it’s not just about loans, you do your assignment before disbursement; you monitor and make sure the money comes back as and when due because the main assets of the microfinance bank are the risk assets and loans.
“If the policy of the loan is not well managed and you are unable to recover, it will be eroding your capital and you will be losing money and gradually, you will be out of the market. The procedure we have put in place has helped us thus far.”
On the proposed minimum paid-up capital of microfinance banks to N100m set by the Central Bank of Nigeria, Adegbami said that the policy was good but not timely.
“I think the policy ordinarily is good but what I may not say is whether it is timely. And that’s the opinion of many other industry operators. It’s a good policy on paper but in terms of its finesse and practicality, I may not agree with it,” he said.
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