Lion Microfinance removed curatorship
THE Reserve Bank of Zimbabwe (RBZ) says it had finally removed Lion Microfinance Limited from curatorship, over a year after the institution had its doors closed to the public over low capitalisation and governance issues.
The resurrection of the institution followed its recapitalisation, the central bank said. Lion Microfinance was closed down in July 2019 due to under capitalisation and weak governance issues.
Following its closure, the microfinance institution was placed under management of the Deposit Protection Corporation (DPC), which in turn sub-contracted Ngoni Kudenga of BDO Tax and Advisory Services to manage the curatorship process.
The curatorship window was extended more than three times as the authorities battled to save the institution.
“Notice is hereby given that Lion Microfinance Limited has today, been removed from curatorship following recapitalisation of the institution,” the RBZ said.
“The Deposit Protection Corporation, which was the curator of Lion Microfinance Limited, will now proceed to hand over management of the institution to the board and senior management.”
The central bank, however, said resumption of operations would only follow after the MFI has put in place the “necessary systems and structures” to the satisfaction of the apex bank.
While the RBZ did not say how much had been injected into the MFI’s operations, a new minimum capitalisation threshold announced last month requires that the institution have a capital base of at least US$5 million by the end of next year. During a curatorship, the board and management of the firm are relieved of their control of the institution, with the curator or administrator taking over the full management functions for purposes of rehabilitating it
Curatorships are generally triggered by concerns about the management or financial viability of the bank. In September last year, the central bank allowed Lion Microfinance, which is a deposit taking microfinance institution (DTMFI), to partially re-open its doors to the public but only for lending purposes.
Unlike ordinary microfinance institutions, DTMFIs are a special breed, which are involved in both lending micro-loans and taking deposits from the public. – New Ziana