Through a Tier-based system, the monetary regulator also adjusted the time frame given to the different categories of microfinance banks operating in Nigeria to recapitalise.

The review was followed up to the circular released last year on the ‘Review of minimum capital requirements for microfinance banks in Nigeria.’

The review categorised microfinance banks into the unit, state and national operators.

The headquarters of the Nigerian central bank stands in Abuja, Nigeria.

The capital requirements for the units are as follows:

1. Unit microfinance banks

Previous requirement: N20 million

Tier 2 unit microfinance banks – operating only in the rural, unbanked or underbanked areas.

  • Revised capital: N35 million - Threshold by April 2020
  • Minimum Capital: N50 million - Threshold by April 2021

Tier 1 unit microfinance banks - operating in the urban and high-density banked areas of the society.

  • Revised Capital: N100 million - Threshold: April 2020
  • Minimum capital: N200 million - Threshold: April 2021

2. State microfinance banks

  • Previous requirement: N100 million
  • Capital requirement: N500 million by April 2020
  • Capital requirement: N1 billion by April 2021

3. National microfinance banks

  • Previous requirement: N2 billion
  • Capital requirement: N3.5 billion by April 2020
  • Capital requirement: N5 billion by April 2021

Last year, Kevin Amugo, CBN's Director, Financial Policy and Regulation Department announced the increment in the minimum capital base of National MFBs to N5 billion from N2 million. State's microfinance capital requirement increased to N1 billion from N100 million and Unit MFBs from N20 million to N200 million.

The CBN explained that the revision became inevitable as the sector had been contending with challenges such as inadequate capital base, weak corporate governance, ineffective risk management practices, among others.

It further stated that the new model for unit microfinance banks will ensure continued operations of microfinance banks in the rural, unbanked and underbanked areas of the economy.