CBN approves closure of 83 micro-finance banks – NDIC

The Central Bank of Nigeria (CBN) has approved the liquidation of 83 micro-finance banks, Alhaji Umaru Ibrahim, the Managing Director, Nigeria Deposit Insurance Corporation (NDIC), said in Abuja. Ibrahim, who made the disclosure when he appeared before the Senate Committee on Banking and Currency to defend NDIC’s  2014 budget, said the licences of the 83 banks had been revoked by CBN.

He said that the closure of the 83 micro-finance banks became necessary because it was discovered that some of them existed only on paper, while others were used to defraud Nigerians. He added that there were up to 900 micro-finance banks operating in the country, out of which, 83 had been listed for liquidation.

According to him. NDIC is already working to determine the number of depositors and how much each deposited in the banks in order to pay them. He said the operations of some of the micro-finance banks had become epileptic, announcing that the corporation’s
2014 budget had made provision for the sum of N105 billion as pay-off fund incase any bank went  under. He added that “funding gap is what we do to prepare for the rainy day. We hope and pray that the rainy day does not come but any insurance should prepare for the rainy day. As we speak, no bank benefited from the fund in 2013.”

Speaking on the “dollarisation” of the economy by speculators, the managing director said that the CBN was looking into the issue to ensure that it did not affect the economy.

Ibrahim said that in 2013, the NDIC maintained confidence and stability in the banking system through continuous and effective supervision and regulation of the system.

He noted that the corporation was working to ensure that depositors of financial institutions that had been liquidated were paid their monies.

“We have stepped up awareness and campaigns about our activities to make sure that members of the public put up claims of their locked up deposits in liquidated financial institutions. We appointed some banks as agents, with the assistance of our various zonal offices established in various parts of the country. “Our plan for this year is to continue to protect depositors’ funds and to enhance supervision.”

The NDIC boss said that the corporation was working to promote financial literacy and consumer protection in order to enhance financial inclusion.

“We are doing this so that millions of Nigerians that do not have access to banks or any form of financial system or outlet are assisted in various ways,” he added. He pointed out that plans were underway to work out ways and means to regulate mobile banking in the country.

He said the NDIC was partnering with the CBN to ensure that depositors who used the mobile phone system were protected. “Mobile banking is emerging and seven banks have been licenced by the CBN to get involved in mobile banking and there are 11 non-banking telecommunication-related institutions also licenced to offer mobile money service,” the managing director added.