CBN approves closure of 83 micro finance banks

Some of the affected banks were closed because they only existed in paper.
The Managing Director of the Nigeria Deposit Insurance Corporation, NDIC, Umaru Ibrahim, said on Tuesday that the Central Bank of Nigeria, CBN, approved the liquidation of 83 of the over 900 licensed microfinance banks currently in the country.

Mr. Ibrahim told the Senate Committee on Banking and Currency during the NDIC’s 2014 budget defence that plans are already on to develop the framework for regulating mobile banking operations in the country.

He said the affected microfinance banks were closed, because it was found out that some of them existed only on paper, while others were used solely for the purpose of defrauding Nigerians.

Since the operations of some of the microfinance banks were found to have been dysfunctional, Mr. Ibrahim said about N105 billion was provided in the 2014 budget to pay off depositors who may be affected should any of them collapse.

He, however, gave the assurance that the NDIC would work to determine the number of depositors, their individual deposits and modalities for paying them.

On other activities of the NDIC, the Managing Director said the corporation was currently embarking on a rebranding project after two decades of existence.

In 2013, he said, the corporation maintained confidence and stability of the banking system by effectively supervising and regulating the system, as well as paying depositors of liquidated institutions.

“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”, Mr. Ibrahim said.

He said the NDIC appointed some banks as agents, with the assistance of the various zonal offices established in various parts of the country.

The corporation’s plan for 2014, he said, would be to continue to protect depositors’ funds and to promote financial literacy, and enhance financial inclusion, so that millions of Nigerians who do not have access to banks for any form of financial system or outlet are assisted in various ways.

Mr. Ibrahim noted a growing partnership between NDIC and CBN on conversations towards appropriate regulation of the mobile banking system. He said mobile banks are emerging, with seven banks already licensed to provide mobile banking services.

He said there were 11 non-banking telecommunications related institutions that have also been licensed to offer mobile money service to the public, and that the depositors of the institutions offering mobile banking need to be identified and protected.

“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 event of any crisis, they are covered. Unless they have that assurance, one would not expect them to accept to participate in this revolutionary project that is coming on board,” he said.

 


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