The Nigeria Deposit Insurance Corporation (NDIC) has said it will provide 100 per cent cover for verified depositors claims depositors in failed 154 Microfinance Banks (MfBs).
The licences of the banks were revoked by the Central Bank of Nigeria (CBN) last month.
It said from record obtained, majority of the depositors especially in the MfBs have less than N200,000 in their accounts.
NDIC Managing Director and Chief Executive, Umaru Ibrahim said the corporation in fulfilling it’s core mandate of insuring depositors, will soon start paying the verified claims to appropriate depositors,including those in the six Primary Mortgage Banks (PMBs) whose licences were also revoked.
Managing director was yesterday represented by Mohammed Kudu Ibrahim, Head, Communication and Public Affairs of the corporation during the ongoing at Lagos International Trade fair organised by the Lagos Chamber of Commerce and Industry (LCCI).
He said the licences were revoked due to erosion of their capital base,poor liquidity,inept management as well as some insiders helping themselves with loans they never intend to pay back.
It was further worsened by boisterous lifestyle of management that remained at variance with the philosophy of microfinance banking operations.
Represented by the Head,Communications and Public Affairs, Mohammed Ibrahim, the NDIC chief said the insurer will continue to work with CBN to ensure effective supervision of banks to follow strictly the rules and regulations guiding banking operations.
He said the bridge bank option adopted in former Skye Bank now Polaris Bank was able to let it continue banking operations in the 277 branches of the bank, with over 6000 jobs saved and depositors have unhindered access to deposits in excess of N949.60 billion as at June 2018.
“Meanwhile, all those that contributed to the failure of the bank are being investigated by relevant agencies of the government and would be prosecuted to serve as deterrent to others,” he said.
He explained that as provided for in the NDIC Act 2006, when financial institutions fail, depositors of Deposit Money Banks (DMBs), Non-Interest Banks (NIBs) and Primary Mortgage Banks (PMBs)are reimbursed up to a maximum limit of N500,000.00, while the maximun insured coverage for depositors of MFBs is N200,000.00. However, he added, it is important to also stress that depositors who have funds in excess of the insured limits are paid dividends from the liquidation of failed banks depending on the quality of their assets and outcome of debt recoveries by the NDIC.
He said the NDIC will, with other stakeholders, continue to protect depositors in the domestic financial system against fragrant disregard of extant rules by management of financial institutions in terms of stalling the occurrence of unlawful insiders’ dealings, weak internal control and overall non-compliance to prudential guidelines.