BY CHINYERE OBIORA, LAGOS – The Managing Director of Nigeria Deposit Insurance Corporation (NDIC) Alhaji Umaru Ibrahim says insolvency accounted for the revocation of operating licences issued to 154 Micro-finance Banks (MFBs) and six Primary Mortgage Banks (PMBs) in the country.
He said attributed the action to erosion of their capital base, poor liquidity, and inept management, as well as insiders’ abuses of financial processes in the affected institutions
Addressing stakeholders during NDIC’s Special Day at the 2018 Lagos International Trade Fair, Mr Ibrahim frowned at inherent abuses and gross financial misconduct by some insiders who helped themselves to loans with no intention of repaying such facilities.
The NDIC boss said the situation is further worsened by boisterous management life style that remained at variance with the global philosophy of micro-finance banking operations.
Mr Ibrahim said the Corporation has commenced verification of insured depositors and would soon start paying the verified claims to appropriate depositors in fulfilment of its core mandate.
On the record so far obtained from the affected institutions, Mr Ibrahim noted that most depositors, especially in the MFBs, have less than N200,000.00 in their accounts, stating the development means NDIC would hopefully be in a position to cover 100 per cent of such deposited funds in the MFBs.
He also expressed confidence that the Nigeria’s financial sector changing landscape has promoted the broadening dimension of Mobile Money Operators (MMOs) in the country.
He said though the development has effectively altered the scope and depth of regulatory/supervisory interventions, NDIC remains committed to protecting and securing depositors’ funds in the nation’s banking sector.
According to him, the number of MMOs licenced by the Central Bank of Nigeria (CBN) currently stands at 23, with eight of them being ‘Bank-Led’ and the remaining 15 ‘Non-Bank Led’.
He stated that by year 2017 ending, accounts’ owners in MMOs nationwide stood at over 153 million, adding that the NDIC provides deposit insurance coverage to subscribers of MMOs to the maximum limit of N500,000.00 through the Pass-Through Deposit Insurance Framework.
The NDIC Chief Executive, who noted that the development has promoted financial inclusion drive across the broad spectrum of Nigeria’s economy, said it would further enhance financial system stability in subsequent periods, and avoid recurrence of depositors’ disappointments.
“The NDIC has embarked on various public awareness campaigns explaining the role and responsibilities of the customers to their banks, and vice versa. This will essentially instil market discipline on the part of the depositors to ever be more vigilant in choosing financial institutions to bank with”, he said.
Ibrahim also assured that NDIC would continuously partner with the CBN to ensure effective supervision of banks to ensure strict adherence to rules and regulations guiding banking operations.
He said the collaboration would protect depositors in the domestic financial system against fragrant disregard of extant rules by financial institutions’ management in terms of checking unlawful insiders’ dealings, weak internal control and overall non-compliance to prudential guidelines.
Ibrahim said liaising with other stakeholders, NDIC would not relent in promoting good corporate governance in Nigeria’s banking industry for effective service delivery.
