Stakeholders challenge MfBs on regulatory compliance
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STAKEHOLDERS in the Microfinance Bank, MfB sub-sector have stressed the need for operators to understand regulatory requirements in bank examination.

Meanwhile, they said that more and stiffer competition from non-banking financial players especially the financial technology (fintech) firms, would impact on the performance of the subsector. These positions were expressed at a one day capacity building programme organised by the National Association of Microfinance Banks, NAMB, Ogun State Chapter, in partnership with Bukland Global Ventures with the theme: “Understanding Regulatory Requirements in Bank Examination”. Chairman, NAMB Ogun State Chapter, Mr. Bunmi Ogunrinde, said in his remarks that corporate governance is key to the success of individual institution and the collective sector of the financial system.

Ogunrinde stated: “Regulation between the regulator and the operators is very important to the success of the sub sector in the financial system. In our industry the issue of corporate governance is key to the success of individual institution and the collective sector of the financial system. The regulator and the operator are collaborators toward the success of the financial system.” Speaking on the topic, “Regulatory Compliance Model for MfBs”, former managing director, Bancorp Microfinance Bank, Mr. Jola-Michael Samson, pointed out that the regulators expect the MfBs to render regular and timely returns of operations, install robust and experienced boards of directors, employ competent and committed management and staff, develop a robust enterprise-wide risk management framework for their operations and also develop innovative products that would suit the needs of their target clients. He added that the MfBs sub sector would experience stiff competition from non-banking financial players especially the fintech which would be prominent in the industry, advising practitioners to brace up to the new challenges by partnering with reliable fintech companies while embracing technology for wider outreach and sustainability. Noting that the sub sector would be highly capitalised with fewer players left , he said “Microfinance banking is a concept that has great potentials to alleviate poverty in a large country like Nigeria.

The emergence of fintech is to facilitate the achievement of the financial inclusion goals that will eventually aid poverty alleviation.” In his lecture titled “Corporate Governance and Risk Management,” former Director of the Nigerian Deposit Insurance Corporation, NDIC, Mr. Olalekan Jinadu, said that corporate governance and ethics have become real necessities for enterprise development in Nigeria. He said: “Company executives can no longer afford to pretend that business is not bound by any ethics other than abiding by the law. The isolation of ethics or ethical behaviour from business dealings have in so many instances in the past led to business and system failures with catastrophic consequences.” Also, senior bank examiner, Mrs. Kehinde Osifeso, said that the success of Risk Based Supervision, RBS, as an effective supervisory tool depends on its ability to assist regulators in the timely identification of weak financial institutions in the banking industry so that prompt corrective intervention can be applied in order to prevent contagious effect on other sound banks. Osifeso said that the effectiveness of the risk management control functions will improve the risk profile of an institution, if the board could put relevant policies in place that would assist in addressing the various identified inherent risks in operations. “The importance of capital and earnings in the assessment of the institution’s risk rating cannot be overemphazied.

Adequate capital plus quality earnings will enhance the bank’s ability to absorb any unexpected shocks that may arise from the risks the institution may have been exposed to”, he added. In his paper titled “Ethics of Lending and Credit Management in Microfinance Institutions,” managing director, Alekun Microfinance Bank, Mr. Joshua Ukute, said that the purpose of credit management is to ensure that all loans granted are repaid as and when due, adding that microfinance institution must review the credit management policies and procedures in line with the dynamics of financial markets and changing environment and technology.



Source: Vanguard