5 March 2014

Nigeria: CBN Orders Liquidation of 83 Microfinance Banks

The Central Bank of Nigeria (CBN) yesterday, listed 83 licenced microfinance banks for liquidation.

The manager director, Nigeria Deposit Insurance Corporation (NDIC), Alhaji Umaru Ibrahim, made the disclosure when he appeared before the Senate Committee on Banking and Currency to defend the NDIC's 2014 budget.

He also said that plans are on to work out ways and means to regulate mobile banking in the country.

On the closure of the 83 microfinance banks, the NDIC boss said that it was discovered that some of the banks exist only on paper while some are used to defraud Nigerians. He said that there are up to 900 microfinance banks operating in the country out of which 83 have been listed for liquidation.

Ibrahim said that the NDIC is already working to determine the number of depositors and how much each deposited in the banks in order to pay them. Some assets of the banks, he said, will also be sold. He further declared that there was no doubt that the operations of some of the microfinance banks have become epileptic.

The NDIC boss said that the sum of N105 billion was provided in the 2014 budget as pay off fund in the event of any bank going under.

"Funding gap is what we do to prepare for the rainy day though we hope and pray that the rainy day does not come. As we speak, no bank benefited from the fund in 2013."

On the 'dollarisation' of the economy by speculators, he said that the issue is being looked into by the CBN to ensure that it does not affect the economy. Ibrahim also told the committee that NDIC initiated rebranding operations to ensure better service.

He noted that after operating for 20 years, the corporation decided that it was time to rebrand for total reorientation.

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

He that the corporation also tried to pay depositors of institutions that had been liquidated.

He said, "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.

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