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Nigeria, March, 06 2008 - Intercontinental Bank plc made a bold and audacious entry into the microfinance sub-sector on thursday with the launch of the most capitalised microfinance in the country.
Blue Intercontinental Microfinance Bank Limited is being set up with a start up capital of N3-billion. The new bank is a partnership between Intercontinental Bank and Blue Financial Services, a South African finance company.
Blue Intercontinental will begin full operation in three months subject to regulatory approval. It would start off as a state microfinance bank, meaning it can set up branches in more than one state of the federation, having surpassed the minimum capital requirement of N1-billion stipulated by the Central Bank of Nigeria (CBN), and the first to operate as such.
The highest capitalised microfinance bank before now was Accion Microfinance Bank Limited, which has a capitalisation of N578-million and still operates as a unit microfinance bank. So far, more than 700 microfinance banks have been licensed by the CBN.
The CBN regulation stipulates minimum capitalisation requirement of N20-million for unit microfinance bank, while a minimum of N1-billion capital is required for a state microfinance bank.
Erastus Akingbola, group chief executive, Intercontinental Bank, says the bank is set up to deepen the activity of microfinance banking in the country
by enhancing accessibility of low cost credits to a greater number of people.
Speaking during an introductory media conference, Akingbola said the establishment of the bank would bring about drastic change in the conduct of microfinance business in the country, going forward.
According to him, microfinance banks were simply operating as finance houses because they were not really servicing the real low-end of the people who had no access to finance from the conventional banks, hence the current prevalent high interest rates.
Speaking on the prevalent high interest rates charged by microfinance banks presently, Akingbola said the interests were that high because the banks were giving out very high credits, as much as N5-million; they had to utilise the money market, and in so doing incur additional costs which was then transferred to borrowers.
“The real people in need of microfinance do not need funds as high as that and Blue Intercontinental Microfinance Bank would fashion its interest depending on how long the borrower requires the loan.”
Also speaking, Dave van Niekerk, chief executive officer, Blue Financial Services, said the bank’s venture would tap into the potential of both the largely unbanked market and the progressive reforms in the financial services sector. “We will be able to use Blue’s proven collection and credit scoring methodologies as well as its processes and procedures that have been specifically refined for the African market.”
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