34,000 Defunct Microfinance Banks’ Depositors Share N1.2bn

By Adedapo Adesanya

The Nigeria Deposit Insurance Corporation (NDIC) claims it has refunded over N1.2 billion to about 34,000 depositors of 179 microfinance banks whose licenses were revoked by the Central Bank of Nigeria (CBN).

The Managing Director of the agency, Mr Bello Hassan, revealed this while speaking during the 2023 Sensitisation Seminar for Judges of the National Industrial Court of Nigeria (NICN) and members of the Investments and Security Tribunal in Port Harcourt, Rivers State on Tuesday.

Mr Hassan, who was represented by the Executive Director of Operations at NDIC, Mr Mustapha Ibrahim, explained that the seminar was imperative for stakeholders to understand the workings and nuances of NDIC and also its operational activities.

Speaking on the theme of the seminar, Strengthening Depositors’ Confidence in Banks and Other Financial Institutions through Speedy Dispensation of Justice, Mr Hassan said the programme was anchored on the need for strategic partnering and collaboration with the judiciary for the promotion of financial System stability in Nigeria.

“Our first mandate is deposit guarantee, in other words, any deposit institution that we found, we have to guarantee payment of depositors.

“The recent closure of 179 microfinance banks and four primary mortgage institutions and we have been resolving them in an orderly manner.

“So far, we have been able to settle over 34,000 depositors of microfinance banks whose licenses were recently revoked by CBN and we paid N1.2 billion to settle these 34,000 depositors of microfinance banks and it is still an ongoing process, liquidation is not something you accomplished in a day or two,” he said.

The NDIC boss further stated that the statutory functions of the corporation include deposit guarantee, bank supervision, distress resolution, and bank liquidation, saying that upon the revocation of banking license, the NDIC has the statutory powers, to liquidate the insured financial institution whose license has been revoked.

He noted some of the challenges facing the NDIC included the, “Execution of judgement against the corporation for liabilities of banks in-liquidation, Attachment of the assets of the corporation (NDIC), including garnishee of the corporation’s corporate accounts, difficulties in the recovery of debts owed the failed banks, difficulties in bringing to book (criminal prosecution) directors, managers, and officers of failed banks that might have contributed to the collapse of their banks.”

He listed others to include a lack of specialised winding-up rules for failed financial institutions as provided for in Section 56(1) and (2) of the NDIC Act 2023; an increase in cases by ex-staff of banks under liquidation on labour law matters and issues relating to stocks and securities matters.”

According to him, despite the noted challenges, the CBN and NDIC had recorded tremendous achievements in the intervention and resolution of problem banks through the various resolution options such as bridge bank mechanism, purchase, and assumption option, among others.

“The corporation over the years has successfully liquidated many DMBs, MFBs, and PMBs whose licenses were revoked by the CBN, and their depositors as well as other claimants paid, with some of them fully settled from debts recovered and the assets realised,” he added.