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CBN to Liquidate 83 Microfinance Banks


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Nigeria

IMAGE: Central Bank Of Nigeria »

05.Mar.2014

 

Story:  Omololu Ogunmade

 

The Central Bank of Nigeria (CBN) is set to liquidate no fewer than 83 licenced microfinance banks (MFBs) in the country, following a recent discovery that the financial institutions were merely set up to defraud Nigerians.

The Managing Director of Nigeria Deposit Insurance Corporation (NDIC), Alhaji Umaru Ibrahim, made this disclosure yesterday while appearing before the Senate Committee on Banking, to defend the corporation's 2014 budget.

Ibrahim who also highlighted plans to regulate mobile banking in the country with a view to curbing fraudulent practices by operators in both the banking and telecoms sector, added that the 83 MFBs lacked the required stamina to survive.

While disclosing that as many as 900 MFBs operate in different parts of the country, Ibrahim explained that 83 of them would be liquidated because they "existed only on paper while some are used to defraud Nigerians."

He also noted that NDIC had put machinery in place towards determining the number of depositors in microfinance sector as well as how much of depositors’ funds are with such banks.

He added: "Some assets of the banks will also be sold. There is no doubt that operations of some of the microfinance banks have become epileptic."

Ibrahim also told the committee that a whopping N105 billion had been provided in the 2014 budget with the intention to pay off depositors of MFBs to be liquidated.

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

While lamenting "the  dollarisation of the economy by speculators," Ibrahim who said the Central Bank of Nigeria (CBN) was already addressing the matter, added that after operating for 20 years, NDIC is now prepared to rebrand itself for more effective service delivery.

Furthermore, he said: "In 2013, we maintained confidence and stability of the banking system through a continuous 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 had established in various parts of the country.”

Continuing, he said: "Our plan for this year is to continue to protect depositors' funds and to enhance the supervision. To promote financial literacy, consumer protection so as to make sure we enhance financial inclusion so that millions of Nigerians that do not have access to banks for any form of financial system or outlet are assisted in various ways.

"For instance, we are partnering with the CBN to discuss the ways and means of protecting depositors of mobile banks and depositors of mobile phone system.”

He noted that seven banks had been licenced by the CBN to get involved in mobile banking, saying that there are 11 non-banking telecommunications related institutions that had been licenced to offer mobile money service.

He stressed the need to properly regulated mobile banking services, saying that there was need to protect bank customers.

“The whole essence of this is that if we 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,” he added.

Article Credit: Thisday newspaper.

Updated 5 Years ago
 

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