By Alois Vinga
THE Reserve Bank of Zimbabwe (RBZ) has extended the Lion Microfinance’s curatorship by a further two months owing to the firm’s failure to meet requirements set down.
In a statement, the central bank confirmed the latest development and also extended the tenure of the curator.
“Notice is hereby given that the curatorship of Lion MicroFinance Limited has been extended by a further period up to 30 September 2020. The Reserve Bank of Zimbabwe has similarly extended the appointment of the Curator, the Deposit Protection Corporation accordingly,” the notice said.
The money lender was placed under curatorship for three months due to under capitalisation and weak management.
Microfinance institutions (MFIs) operating in Zimbabwe are required to meet a minimum capital requirement of RTGS $5 million.
Continued extension of curatorship signals challenges faced in the recovery process for the microfinance institution after the DPC last year said it was focused on restoring the firm’s operations in the shortest possible time.
When a financial institution is placed under curatorship, the board and management of a firm are relieved of their control of the institution, with the curator or administrator taking over the full management functions of the institution for purposes of rehabilitating it.
Curatorships are generally triggered by concerns about the management or financial viability of the bank.
Last year, the central bank allowed Lion Microfinance, which is a deposit taking microfinance institution, to partially re-open its doors to the public but only for lending purposes.
Zimbabwe has over 200 registered Micro Finance institutions which are credited for having played a pivotal role in lending.