By Saka Khaliq, Business World
At least 150 microfinance banks in the country will get a total sum of N3 billion as a bail-out fund in the next couple of months, BusinessWorld can now reveal.
Facts emerged over the weekend that the benefiting banks are microfinance institutions within Lagos State. Each of the banks is expected to access a sum of N20 million from NambLag Trust Fund.
The trust fund is an initiative of the National Association of Microfinance Banks (Namb), Lagos State chapter, to bailout its members from liquidity crisis. Already, members have begun to send in their applications for the fund since the beginning of last month and at least 20 applications have so far been received by the association.
Since the fund is at zero level, it was gathered that Guaranty Trust Bank Plc (GTBank) which is the fund custodian, is expected to provide this fund to operators, while at a stage, each micro finance bank will contribute N500,000 to the fund.
To this end, BusinessWorld gathered that GTBank will determine the interest rate payable on this facility, but the rate will be between 18 and 26 per cent per annum for each bank. The association, when contacted last week, said the first batch of the scheme comprising applications from 20 banks will be forwarded to GTBank in the coming week for processing.
Speaking to BusinessWorld, Mr. Olufemi Babajide, chairman, Namb, Lagos chapter said the fund manager and custodian (GTBank) has written to the association to forward all applications to it for processing. According to him, “The custodians of the fund had agreed and have written to us to forward all applications. We have received about 20 applications which we are collating to send to the trust fund manager. For the first batch, we are looking at accessing N400 million for 20 banks. Our projection with the fund manager is that each MFB will receive N20 million. So, we are looking at N3 billion for 150 MFBs.” He added that it will be done in batches, adding that the association has no control over the rate since it is GTBank’s money. He however said that as members continue to contribute their own part of the fund to the pool, the interest rate will gradually reduce.
The bail-out fund is to rescue microfinance banks while it is expected to provide short term liquidity for microfinance banks so as to avoid liquidity shocks. The fund will also act as a lender of last resort to operators in microfinance market.
Further investigations however reveal that this scheme will in the future provide financing and refinancing facilities for the purpose of ensuring steady liquidity for MFBs, as well as provide long term debenture and equity capital to banks in the long term.
