CBN liquidates 83 microfinance banks

The Central Bank of Nigeria (CBN) has approved the liquidation of 83 licensed microfinance banks.

The Managing Director, Nigerian Deposit Insurance Corporation, (NDIC), Alhaji Umaru Ibrahim, stated this on Tuesday when he appeared before the Senate Committee on Banking and Currency to defend his agency’s 2014 budget.

The NDIC boss said it was discovered that some of the microfinance banks “existed only on paper, while some are used to defraud Nigerians.”

He further explained that there were about 900 microfinance banks operating in the country, out of which 83 of had been listed for liquidation.

Ibrahim said the NDIC was already working towards determining the number of depositors and how much each had in the microfinance institutions in order to pay them.

“Some assets of the banks will also be sold. There is no doubt that the operations of some of the microfinance banks have become epileptic,” he said.

The NDIC boss added that N105bn was provided in the 2014 budget proposals to pay off depositors of liquidated banks.

“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 company should prepare for the rainy day. As we speak, no bank benefited from the fund in 2013,” he said.

Ibrahim lamented what he called “the dollarisation” of the economy by speculators, and assured members of the public that the issue was already being looked into by the CBN to ensure that it did not affect the economy.

He also told the committee that the NDIC had initiated the rebranding of its operations to ensure better service delivery, adding that after operating for 20 years; the corporation decided that it was time to rebrand for total reorientation.

Ibrahim also spoke about plans to regulate mobile banking in the country in order to avoid any form of fraudulent practice by operators, either in the banking or telecommunications sector.

He said, “In 2013, we maintained confidence and stability of the banking system through a continuous and effective supervision and regulation of the system. We have also tried to pay depositors of institutions that had been liquidated.

“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 that we established in various parts of the country.”

The NDIC boss added that his plan for the current fiscal year was to continue to protect depositors’ funds and enhance the supervision because the agency’s Act did not cover such transactions at the moment.

He also pledged to promote financial literacy and ensure consumer protection to ensure that the agency enhanced financial inclusion so that millions of Nigerians that did not have access to banks or financial outlets were assisted in various ways.

Ibrahim said, “We are partnering with the Central Bank of Nigeria to discuss the ways and means of insuring depositors of mobile banks and depositors of mobile phone system.

“Mobile banks are emerging and seven banks have been licensed by the CBN to get involved in mobile banking, and there are 11 non-banking telecommunications-related institutions that have been licensed to offer mobile money services.

“These need to be regulated. The depositors of the institutions offering mobile banking needed to be identified and protected.  The whole essence of this is that we will have millions of such people sending and collecting money through mobile banking system.

“We want to ensure that in the event of any crisis, they are covered. Unless they have that assurance of being covered, you don’t expect them to accept to participate in this revolutionary project that is coming on board.

 

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