NDIC Gets Winding-up Order For 96 MFBs, PMBs In liquidation

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BY CHINYERE OBIORA, LAGOS – The Nigeria Deposit Insurance Corporation (NDIC) has obtained Winding up Orders for 96 out of 183 Micro Finance Banks (MFBs) and Primary Mortgage Banks (PMBs) whose licenses were revoked by the Central Bank of Nigeria (CBN) in May 2023.

Managing Director and Chief Executive Officer of NDIC, Bello Hassan, who disclosed this in Lagos at 2024 Sensitization seminar organised jointly by NDIC and National Judicial Institute for Federal High Court Judges, said the Corporation received the winding up Order in less than one year of the revocation of the MFBs and PMBs licences.

He said the sensitization seminar has helped to drastically reduce the challenge of liquidation-related litigations experienced in the past that made it difficult for the Corporation to wind-up banks whose licenses had been revoked by the CBN as well as settle depositors and other claimants promptly.

Bello further stated that; “There is better understanding of the roles of the Corporation as a corporate body and Deposit Insurer, as distinct from NDIC acting as Liquidator of failed banks whose licenses had been revoked.

Consequently, he said the incidence of litigants that obtained judgment against banks in liquidation and attempted to levy execution against the assets of the Corporation as a corporate body has been substantially diminished.

According to him, the effectiveness of the Deposit Insurance System (DIS) requires a deep understanding of the unique roles of the Corporation in the financial eco-system, adding that this sensitization seminar is one of NDIC’s initiatives to engage the judiciary as an important arm of government towards achieving its mandate.

Hassan said the Corporation’s resolve to continuously promote depositor confidence within the Nigerian Banking system was further demonstrated by the upwards review of the maximum deposit insurance coverage levels, as approved in April 2024.

“The deposit insurance coverage has been raised from N500,000 to N5,000,000 for Deposit Money Banks (DMBs) and Subscribers of Mobile Money Operators (MMOs).

“Accordingly, the coverage for Payment Service Banks (PSBs) and Primary Mortgage Banks (PMBs) has been reviewed from N500,000 to N2,000,000 while that of Microfinance Banks (MFBs), has been increased from N200,000 to N2,000,000”, the NDIC boss said

While urging the Judges to assist in facilitating the speedy issuance of the Winding-Up Rules in accordance with Section 56(2) of NDIC Act 2023, Bello explained that such development would provide for quick and effective winding up of Banks and other licensed
deposit taking financial Institutions whose licenses have been revoked.

In his remarks at the event, Justice Ayokunle Faji, representing the Chief Judge of the Federal High Court, Justice John T. Tsoho said the functions of the courts, particularly when it comes to matters of economy, and financial stability cannot be overemphasised

He stated thus; “As we are going into yet another period of banking consolidation, it is very imperative that judges are on top of their game and the role of the judges at this time cannot be underestimated”.

Projecting what could likely happened in the financial industry in the nearest future, Justice Tsoho said; “There would be quite a lot of activities in the courts, there would be issues of banking capitalisation, there would be issues of restructuring, acquisitions, mergers, and some banks may also want to stop business because they may not be able to meet all the requirements.

“So I am sure that the courts are going to be very busy during this period and I want to assure you that the judges are adequately equipped for this.

“We have had quite a lot of experience in this area and I’m sure that at the end of the day, we’ll be able to add value to the process”.

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