In the face of the unprecedented economic crisis occasioned by the Covid-19 pandemic, the apex monetary authority and regulator in Nigeria, the Central Bank of Nigeria (CBN), as part of its efforts to cushion the economic impact of the pandemic on financial institutions, has extended the deadlines for compliance with the minimum capital requirements for Microfinance Banks (MFBs) in Nigeria earlier announced on 7th March 2019. On 1st May 2020, the CBN communicated, in circular reference FPR/DlR/GEN/ClR/07/054, its decision to extend by one year, the deadlines announced previously. In essence, MFBs in the different categories now have till April 2021 and 2022 to meet the new capital thresholds. The new minimum capital requirement for all categories of MFBs announced on 7 March 2019 remains as follows:
- Tier 2 Unit MFBs (operating in rural, unbanked and under-banked areas) are required to meet the N35 million capital threshold by April 2021 and N50 million by April 2022;
- Tier 1 Unit MFBs are expected to meet the N100 million capital threshold by April 2021 and N200 million by April 2022;
- State MFBs shall increase their capital to N500 million capital threshold by April 2021 and N1 billion by April 2022; and National MFBs are expected to meet the minimum capital of N3.5 billion capital by April 2021 and N5 billion by April 2022.
The extension only affords MFBs more time to comply with the revised minimum capital requirements, which is a welcome development in the face of current economic realities.