The Central Bank of Nigeria (CBN) has listed 83 of the 900 microfinance banks operating in the country for liquidation.
This was revealed by Alhaji Umaru Ibrahim, the Manager Director, Nigeria Deposit Insurance Corporation (NDIC) when he appeared before the Senate Committee on Banking and Currency to defend the corporation’s 2014 budget.
According to him, investigations revealed that the 83 Microfinance bank are only banks on paper or being used to defraud Nigerians, nothing that there was no doubt that the operations of some of the banks have become epileptic.
The NDIC boss said the corporation was working to determine the number of depositors and how much each deposited in the banks in order to pay them.
He added that the sum of N105 billion was provided in the 2014 budget as pay off fund in case any bank goes under.
“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.
Meanwhile, Ibrahim told the committee that after operating for 20 years, the NDIC has initiated rebranding operations to ensure better service.
“We have stepped up awareness and campaigns about our activities to make sure that member 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.”
”Our plan for this year is to continue to protect depositors funds and to enhance the supervision,” he said.
On Mobile banking, Ibrahim said “seven banks had been licensed by the CBN to get involved in mobile banking and there are 11 non banking telecommunications related institutions that had been licensed to offer mobile money service.”
He said the mobile banking will be regulated as depositors of the institutions offering mobile banking needed 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 of being covered, you don’t expect them to accept to participate in this revolutionary project that is coming on board,” he argued.