NDIC offers bailout to troubled micro-finance banks

The bailout comes in the form of financial assistance with minimum interest rate.

The Nigeria Deposit Insurance Corporation, NDIC, has said that it has prepared a bailout package for Micro-Finance Banks, MFBs, in the country facing genuine liquidity issues.

The Corporation’s Managing Director, Umaru Ibrahim, said at a workshop for operators of micro-finance banks in Abuja that the bailout would come in the form of financial assistance that would attract a minimum interest rate.

“We need to extend helping hands by way of financial assistance to deserving MFBs, especially those having liquidity problems,” Mr. Ibrahim said.

He, however, added that prospective beneficiaries must meet certain conditions, one of which is that after the interested banks must pass the mandatory scrutiny by the NDIC of their books and affairs.

According to the NDIC boss, those who misappropriated bank funds by giving unsecured loans to friends and family members “will not qualify for the assistance,” while the NDIC may even be compelled to take over such MFBs. Other categories of micro-finance banks that would not qualify for the loan are those that have not been paying premiums to their customers.

He however urged MFB operators not to be afraid to approach the NDIC for assistance, adding that all that is required is reliable and honest information about the business.

Mr. Ibrahim also said that the NDIC has similar provision for Deposit Money Banks (DMBs), “though only a few of them have come forward to find out how to benefit from it.”

He also disclosed that the Corporation has set aside N16 billion special fund to augment deficit in the premium expected to be paid by operators of Microfinance Banks, MFBs.

He lamented that the level of premium collection by the NDIC was a problem for the corporation, saying that the NDIC has so far collected from micro-finance banks a paltry sum of N1.6 billion since inception.

“There are some major players, if one or two of them fail, NDIC will not be able to meet its obligation with this N1.6 billion. I urge you to pay your premiums regularly as and when due,” he cautioned.

He said the NDIC has set aside about N16 billion special fund to augment payment to depositors of the 103 failed micro-finance banks, adding that so far about N4.5 billion is expected to be paid on insured deposit liabilities.

At the moment, he said the NDIC has paid about N2.5 billion of insured deposits, though he expressed concerns that the NDIC could not have met these obligations if it was depending on the N1.6 billion collected as premium form the MFBs.

Mr. Ibrahim also decried what he called the “lack of rendition of returns” by micro finance bank operators, urging them to improve their information management systems in that direction.

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