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Nigeria: NDIC Pays N72bn to Depositors of Failed Banks
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Daily Champion (Lagos)
27 March 2008
Posted to the web 27 March 2008
Tom Moses
Calabar
The Nigeria Deposit Insurance Corporation (NDIC) Tuesday said that N72 billion has so far been expended on the settlement of depositors in 10 out of the 14 failed banks in the country, just as 716 community banks have been given micro-finance bank operational licences.
Managing Director/Chief Executive of the corporation, Mr. Ganiyu Ogunleye made the disclosure in Calabar at a one-day sensitization seminar on the 'Introduction of Deposit Insurance Scheme to Micro-finance Banks and Primary Mortgage Institutions but lamented that same could not be done for the remaining four banks because of subsisting court cases involving them.
According to him, the corporation achieved this through what he termed its implementation of 'Purchase and Assumption' (P&A) transactions which accounted for 86 per cent of the private deposits of those banks.
He also said that recent statistics by the Central Bank of Nigeria (CBN) indicated that 716 community banks have been licensed to operate as micro-finance banks and so, enjoined MFBs and PMIs to support wealth creation for the poor in line with the seven-point agenda of the President Yar'Adua's administration.
The MFBs and PMIs, he stated can impact positively on micro, small and medium scale enterprises by attracting more funds from the informal sector or the unbanked populace as well as provide them with easy access to banking services, promising that NDIC would protect the interests of depositors through the Deposit Insurance Scheme (DIS).
He, however, discouraged operators who mobilize resources from the rural or sub-urban areas mainly for investments in money market products noting that such investments did not translate to economic development of the areas from which the resources were mobilized.
Ogunleye noted that investments in capital assets by MFBs and PMIs reduces their liquidity power and makes depositors not to have their monies when they need same and that NDIC condemns such a situation.
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"The soundness of the financial sector is very critical to the successful implementation of the laudable macro economic policies of the Federal Government. Consequently, the regulators of the financial services industry will promote sound governance of financial institutions in banking, insurance and securities sub-sector of the financial system", he stressed.
Thus, he threatened to clamp down on all charlatans and unprofessional operators with the aim of flushing them out of the system.
"A policy of zero tolerance for unethical conduct and mismanagement will be resolutely pursued in keeping with the present administration's emphasis on probity and accountability" Ogunleye said.
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