Non-repayment of loans, bane of microfinance banks

The non-payment of loans and delays by customers in the repayment of credit facilities given to them by microfinance banks have become a major obstacle militating against the poverty eradication efforts of the banks, the Chairman, Umuchinemere Microfinance Bank, Rev. Obiora Ike, has said.Decrying the situation in a statement, Ike said that the bank was compelled by banking rules and regulations to write off over N70m of its profit in 2010 because of the problem of non-repayment of loans.He said, Many people come to the bank to collect money, use it to do business but when it is time to repay the loan, they deploy all manner of antics not to repay. They tell the bank not to disturb them. And when the bank comes a second time, they change address and when the bank traces them to their new location, they will go to court and say the bank is disturbing them.That is the phenomenon happening in Nigeria, people taking loan and not wanting to repay, thereby hampering the efforts of banks in poverty reduction.The chairman urged the loan defaulters to act with integrity and keep their promise to repay their loans.He said, We are faced with the challenges of delays by some customers in the repayment of loans administered as and when due, resulting in the write off of such debts from our reserves. The banks boss who is also a professor of Ethics at the Godfrey Okoye University, Enugu, said despite all odds, the bank was able to eke out a net profit-after-tax of N27.4m, and 11 kobo earnings per share in 2010, which was ploughed back into the banks share reserve to beef up its share capital.He said the activities of the bank over the years, especially during the period under review, got wide acknowledgement and earned it more investors from within and outside Nigeria. Enugu State Government, for instance, had finalised arrangements for 200 more cabs to be added to the fleet of 500 vehicles in its poverty reduction scheme in the transportation area managed by the bank.
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