The huge cost of implementing the Bank Verification Number policy for microfinance banks’ customers may delay the Central Bank of Nigeria from extending the exercise to the 978 MFBs in the country for now.
Top officials in the banking sector confided in SUNDAY PUNCH that the BVN exercise could not easily be implemented in the microfinance banking segment of the financial industry owing to the cost of the exercise and the huge number of MFBs operating in the sector.
Statistics from the Nigerian Deposit Insurance Corporation as of December 31, 2016, revealed that there are 978 MFBs in the country with total deposit liabilities of N158bn and total loan portfolio amounting N195bn
The Minister of Finance, Mrs. Kemi Adeosun, had in a bid to fish out more ghost workers written to the CBN Governor, Mr Godwin Emefiele, calling on the apex bank to extend the requirement for BVN to account holders in microfinance banks.
She had explained that this would facilitate the detection of bank accounts which might have been opened and operated in such banks for ghost workers by fraudulent syndicates.
The minister stated that operating bank accounts in MFBs without requirement for BVN had left a huge loophole which could be used to hide and launder proceeds of crimes without being detected by law enforcement agencies.
She had also explained that prior to the deadline for obtaining the BVN, there was large movements in the number of salary accounts of federal employees from commercial banks to microfinance banks.
The mass movement of funds, she lamented, was suspicious, adding that the ministry had begun investigation into it.
She had said, “Some MFBs, such as National Police Force Microfinance, have over 27,000 salary accounts. Our inability to perform checks on such a large number of salary earners is a key risk.”
Our correspondent however learnt that the cost implication of installing the needed technology for the BVN had made the apex bank to put the exercise on hold.
Findings further revealed that while the enrolment exercises for Deposit Money Banks was partly funded by the CBN and the Bankers’ Committee, it would be a huge challenge to replicate such for the microfinance banking sector because most of them may not be able to have the financial strength to bear the costs.
A top government official confided in our correspondent on Saturday that for the CBN to be able to effectively carry out the exercise in the MFB sector, the apex bank would need the assistance of the Federal Government in funding the initiative.
The official said, “The BVN exercise is not something that you just go and do because of a letter (written to CBN by the Minister of Finance, Mrs Kemi Adeosun).
“Do you know the cost of implementing BVN? Do you know what it costs? It’s really an expensive project.
“It is something you have to invest a lot of money in. Why don’t they come and discuss it with the CBN governor? Why do they prefer to send a letter and then announce to the press?
“BVN involves software and a lot of other equipment. So, where is the funding to do that considering the fact that we have about 900 microfinance banks in this country?
“How does one control such exercise in terms of putting the equipment in each of the 900 microfinance banks?
“How many microfinance banks can afford such exercise? The government can provide funds to finance the exercise if it is very critical to achieve its objective.”
Attempts to get the Acting Director, Corporate Communications, CBN, Mr Isaac Okoroafor, to comment on the issue were not successful as calls to his mobile phone did not connect.
When our correspondent contacted the Director of Information in the Ministry of Finance, Mr Salisu Dambatta, to enquire if the ministry would be willing to contribute to funding the initiative, he said he had no information on that.
He said, “The cost of doing the BVN project is huge but honestly, I don’t have any information as to whether the Ministry of Finance would contribute in funding the exercise for the micro finance banks.”
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