Managing Director of the Nigeria Deposit Insurance Corporation (NDIC) Alhaji Umaru Ibrahim on Tuesday revealed that the Central Bank of Nigeria (CBN) has sanctioned the liquidation of 83 of the about-900 licensed microfinance banks in the country.
Speaking during an appearance before the Senate Committee on Banking and Currency to defend NDIC’s 2014 budget, Ibrahim said plans are already afoot to devise the framework for regulating mobile banking in the country.
Explaining why the said microfinance banks were closed, he revealed that some of them exist only on paper while others were meant solely for defrauding Nigerians.
However, he assured that NDIC is already working to determine the number of depositors, their individual deposits and modalities for paying them. He revealed that since the operations of some of the microfinance were long discovered to be epileptic, a sum of N105 billion was provided in the 2014 budget as pay off fund should any bank collapse.
Speaking on other activities of NDIC, he said the corporation is on a rebranding project — well-deserved after two decades of existence. In 2013, he said, the corporation maintained confidence and stability of the banking system by effectively supervising and regulating of 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”, Ibrahim said.
“We appointed some banks as agents with the assistance of our various zonal offices that we established in various parts of the country. Our plan for this year is to continue to protect depositors’ funds and to enhance the supervision, 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”.
Ibrahim revealed a burgeoning partnership between NDIC and CBN on conversations towards appropriate regulation of the mobile banking system. He admitted that mobile banks are emerging and seven banks have been licensed by the CBN to get involved in mobile banking, while there are 11 non-banking telecommunications related institutions that have been licensed to offer mobile money service.
“The depositors of the institutions offering mobile banking need to be identified and protected”, he said.
“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”.
