About 60 per cent of the Microfinance Banks (MFBs) recently shut by the Central Bank of Nigeria (CBN) were not paying their deposit insurance premiums to the Nigeria Deposit Insurance Corporation (NDIC).
An official told The Nation that the Corporation would go ahead to pay claims to depositors of these failed microfinance banks.
According to the official, “these microfinance banks, about 60 per cent of them don’t pay premium but NDIC will pay the insured sum because it is statutory on us”.
He noted that “on the average, 75 per cent of the MFBs are paying premium while 25 per cent are in default. Meanwhile, some of the MFBs closed on their own without dime”.
It was also disclosed that the NDIC has started settling depositors of these microfinance banks, one month after their licence were revoked.
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This is the first time the NDIC is settling claims from deposit of failed banks in one month.
The NDIC, the official said, will overlook the indiscretions of these erring microfinance banks and pay their depositors “because they assist our rural communities to have financial inclusion”.
By settling the depositors of these distressed microfinance banks, the NDIC official said the Corporation hopes to build trust with the rural communities as well as promote financial inclusion.
“Many of these micro finance banks must have closed shops on their own, but we must pay the insured sums.
“One thing people don’t know is that the premium that is collected is supposed to be a fallback for occasions like this.
“Any bank that is in trouble or whose licence has been revoked, the NDIC is expected to pay the insured sum.
“These are the issues; that is why they (microfinance banks in rural areas) have no Know Your Customer (KYC).
“People in the rural communities don’t have collaterals, among others and the loans that are supposed to be granted to the rural dwellers, how much is it?,’’ the official added.
“Instead they get loans through group lending, cooperatives and associations so that they can monitor themselves to improve their lives.
The Central Bank of Nigeria revoked the operating licences of 132 microfinance banks, in May.
The revocation exercise was disclosed in the official gazette of the Federal Government published on the website of the CBN on Tuesday.
The licences of the financial institutions were revoked because they ceased to carry on in Nigeria, the type of business for which their licences were issued for a continuous period of six months.
They were also alleged to have “failed to fulfil or comply with the conditions subject to which their licences were granted; or failed to comply with the obligations imposed upon them by the Central Bank of Nigeria in accordance with the provisions of Banks and Other Financial Institutions Act (BOFIA) 2020, Act No. 5.”
On its part the NDIC assured depositors of these distressed banks of speedy settlement of their claims.
Managing Director of NDIC Mr. Bello Hassan said, as deposit insurer, the NDIC has started the process of payment of the insured sums immediately with the verification of eligible depositors at the respective premises of the closed banks.
He enjoined such depositors to get the required documents for the exercise such as proof of account ownership, verifiable means of identification and alternate bank account to facilitate their seamless verification and payment of their insured deposits.
The NDIC Boss stated that the insured deposit is the first claim that the Corporation pays to depositors upon revocation of bank’s license by the CBN, adding that the maximum specified limits for the MFB is N200,000.
As liquidator, Hassan said the corporation has also set machinery in motion to commence sales of assets of the defunct banks as well as recover debts owed to them in order to declare liquidation dividends on pro rata basis to the affected depositors with claims exceeding the maximum insured sums.