Exclusion of Conventional Commercial Banks from Establishing Micro-finance Banks

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Microfinance > Forum > Exclusion of Conventional Commercial Banks from Establishing Micro-finance Banks

Exclusion of Conventional Commercial Banks from Establishing Micro-finance Banks
Nwagbosoh, Isaac, Management Consultant, Nigeria, Member
The establishment of micro-finance banking institutions is a welcome development, but I suggest that the Central Bank of Nigeria (C.B.N.) should forbid/exclude existing commercial banking institutions in Nigeria from establishing, owning and operating these institutions. This, apart from really addressing the needs of the targeted rural populace, I think would help in developing micro-financing operations as a sub-sector within the banking industry.

Micro Finance and Commercial Banks
Theurimwangi, Kenya, Member
In Kenya the micro finance concept has grown to a level where one of the pioneer micro finance (Equity Bank) converted to a commercial bank. However despite its conversion to a bank it has maintained minimal barriers to entry and has continued to attract the previously unbanked Kenyans. It is now the leading bank in terms of bank accounts, ahead of many multinational banks. The equity concept has led to the big banks to go back to the rural seeking out for the rural populations where they had divested. My point is that the microfinance concept does not not only help the poor to earn a living but will influence the bigger banks to rethink their approach and strategies as well.

Are Microfinance Institutions Playing Their Role?
ELLIOTT S N, Student (MBA), Cameroon, Member
I have been working in the microfinance sector in Cameroon and it's quite interesting.
Being a very competitive sector, micro finance institutions usually come up with very innovative ideas for financial services. However, much still needs to be done in terms of meeting the needs of low income earners or people who ave no access to commercial bank services.
Many micro finance institutions tend to see themselves as close competitors to banks.
I think it should be a more complementary relationship not "competitive" as such.
That not withstanding, the activities of microfinance institutions here have had a big impact on the activities of activities of banks. Banks here are more aggressive in their marketing, affordable and flexible than they were about 10 years ago.

Exclude Conventional Banks from Microfinance
Edward Onipede, Manager, United Kingdom, Member
I concur to the exclusion of conventional banks, especially as this scheme would be setup mainly in the third world. The records of conventional banks in these areas are murky at the very least. Anyway, it's doubtful they would see MFI as a viable, "profitable-enough" scheme for them to enter.
A cynic might say that MFI is too ethical for the conventional banks!

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