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Tag: NDIC

  • NDIC pays N588.6m to depositors of shut MfBs

    NDIC pays N588.6m to depositors of shut MfBs

    The Nigeria Deposit Insurance Corporation (NDIC) has started the payment of of N588.6 million to 33 out of the 83 operators of closed microfinance banks (MfBs).

    A statement endorsed by  its Head, Corporate Communication, H. S. Birch said the deposit pay-out will ensure that each depositor receives a maximum of N200, 000.

    He said the verification and payment of insured deposits of 33 MFBs whose licences were recently revoked by the Central Bank of Nigeria (CBN) has commenced.

    He said as part of the verification and payment exercise, affected depositors are to report to the last known addresses of their MfBs with evidence of account ownership including pass books, cheque books and personal identification documents such as national identity cards, drivers licences and voters cards.

    Depositors without valid identification documents are to obtain introduction letters with their photographs; the letters must be duly signed by traditional rulers of their localities or local government chairmen.

    He said the depositors are also requested to take along details of alternative bank accounts operated in any of the existing banks into which their insured claims could be paid while those without bank accounts have been asked to provide details of accounts of close relatives to which their payment could be made.

    NDIC said it has commenced verification and payment of N125 million as first liquidation dividend of 50 kobo each to shareholders of the defunct Rims Merchant Bank at its Abuja and Lagos Offices and eight zonal offices nationwide.

  • CBN, NDIC to inspect microfinance banks quarterly

    CBN, NDIC to inspect microfinance banks quarterly

    The Central Bank of Nigeria (CBN) and Nigeria Deposit Insurance Corporation (NDIC) will, henceforth, look into the books of microfinance banks (MfBs) to ascertain their state of health.
    It is to check the lenders’ stress level, clean up of delinquent loans and reorganise their balance sheets to forestall unwholesome practices that resulted in the liquidation of many MfBs in the past.
    Last February, the CBN announced the revocation of licences of 83 MfBs. The closure of the institutions, according to the apex bank, took effect from December 20, last year. In view of the closure, the NDIC was appointed the provisional liquidator for their winding up.
    The NDIC has begun the process of winding up of the affairs of the affected MfBs. Findings showed that the inability of the firms to recapitalise was responsible for their closure.
    The apex bank gave MfBs up to December 31, last year, to recapitalise or be liquidated. Its Director, Other Financial Institutions, O.A. Fabamwo, said it was exigent to remind directors and shareholders of all MfBs that the deadline is sacrosanct.
    He, however, advised the banks to conduct due diligence and seek professional legal and financial advice. He also reminded directors and shareholders of all MfBs on the deadline to ensure compliance with the Revised Microfinance Policy Framework, particularly in respect of the capital requirements for each category of MfB and existing branches/cash centres, among others.
    Already, the CBN and other stakeholders have been carrying out intensive sensitisation of the subsector, educating operators on risk management and corporate governance principles.
    The CBN, which several months ago asked the MFBs to recapitalise, had categorised them under different amounts of capital base requirement. A unit MfB bank is authorised to operate in one location without branches/cash centres, and is required to have a minimum paid up capital of N20 million, while that of a state is expected to have a minimum paid up capital of N100 million. It is equally allowed to open branches within the same state or the Federal Capital Territory (FCT).
    But the national MfB is authorised to operate in more than one state, including the Federal Capital Territory (FCT). It is required to have a minimum paid up capital of N2 billion and is allowed to open branches in all states of the federation and the FCT, although subject to prior written approval by the CBN.
    Many of the MfBs being liquidated by the NDIC ran into trouble when many of their debtors refused to pay back their loans, over 80 per cent of which were unsecured. Besides, some of the MfBs were taking excessive risks, and branching out too quickly without considering resources at their disposal and whether utilised funds were short or long term obligations.

  • MfBs for quarterly inspection, says CBN

    MfBs for quarterly inspection, says CBN

    Microfinance Banks (MfBs) will henceforth undergo quarterly inspection by the Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC) to ascertain the state of their health, The Nation has learnt.

    An insider source in the NDIC said the inspection is usually to check the lenders’ stress level, clean up delinquent loans and reorganise their balance sheets to forestall unwholesome practices that resulted in liquidation of many of the MfBs in the past.

    The CBN last month revocated the licences of 83 MfBs. The closure of the affected institutions, according to the apex bank, took effect from December 20, last year. The NDIC was appointed their provisional liquidator.

    Already, the NDIC has started the winding up of the affected MfBs. Findings showed that the inability of the affected firms to recapitalise was mainly responsible for their closure.

    The CBN had given MfBs till last December 31 to recapitalise or be shut.

    CBN’s Director, Other Financial Institutions, O.A. Fabamwo said it was important to remind directors and shareholders of MfBs that the deadline would not be extended.

    He, however, advised the banks to conduct due diligence and seek professional advice. He reminded owners of MfBs on the deadline for compliance with the Revised Microfinance Policy Framework, particularly in respect of the capital requirements for each category of MfB and existing branches/cash centres among others.

    Already, the CBN and other stakeholders have been sensitising operators on risk management and corporate governance principles.

    Speaking during the last Bankers’ Committee meeting in Lagos, CBN Director, Banking Supervision, Mrs Tokunbo Martins said the regulator was not interested in proliferation of MfBs. Rather, it wants those in business to be sound, she said.

    She said poor corporate governance and a high level of non-performing loans, among others, were some of the key challenges facing the subsector.

    For instance, the CBN’s guidelines for the establishment of Mfbs, stipulate that operators are not expected to overshoot their spending.

    She also said many of the MfBs were deficient in their understanding of the microfinance concept.

    The CBN, which some months ago, asked the MFBs to recapitalise, categorised them. A unit MfB bank is authorised to operate in one location without branches/cash centres and is required to have a minimum paid up capital of N20 million while that of a state is expected to have a minimum paid up capital of N100 million. It is allowed to open branches within the same state or the Federal Capital Territory (FCT).

    The national MfB is authorised to operate in more than one state, including the FCT. It is required to have a minimum paid up capital of N2 billion and is allowed to open branches in all the states and the Federal Capital Territory (FCT), subject to the approval of the CBN.

    Many of the MfBs being liquidated by the NDIC sailed into troubled waters when their debtors refused to pay back their loans, over 80 per cent of which were unsecured.

    Besides, some of the MfBs were taking excessive risks, such as opening branches without considering resources at their disposal .

    Also, there was the problem of whether their utilised funds were on short or long terms.

  • ‘Insurance vital to mobile money’s success’

    ‘Insurance vital to mobile money’s success’

    Authorities in charge of mobile money matters have been urged give insurance cover to subscribers to encourage them.

    Executive Director, Digital Africa, Dr Armstrung Takang, who gave the advice, said the project which was designed as part of the cash-less policy of the Central Bank of Nigeria (CBN) about three years ago, has not been as successful as it ought to have been because people are not sure what will happen when they lose their money in the course of using the platform.

    The issue of who is liable for loss of money in the mobile money platform has always been avoided by the CBN, the operators and the firms licensed by the apex bank.

    Takang said the absence of an insurance firm to bear the risk of people that may lose their money while using the platform was a great disincentive, adding that the Nigerian Deposit Insurance Company (NDIC) should encourage people to use the banks because they know in case of a failure, they would not lose their deposits.

    He said: “There is need to have insurance to guarantee confidence so that I can say to you that if you use your phone to transfer money and there is a problem and you lose money, I guarantee that you will not lose that money. It is like when we have NDIC in banking. You and I will go and open an account. If that bank goes down, I know I can go to NDIC and I will get my money. If you lose money online, what happens? It is still a grey area.”

    He called for enabling laws and provision of requisite security platforms in terms of technology to ensure that these transactions are safe to inspire confidence in the people that are going to handle the transactions.

  • N200bn SME fund: NDIC urges states, councils to float microfinance firms

    N200bn SME fund: NDIC urges states, councils to float microfinance firms

    The Managing Director and Chief Executive of the Nigeria Deposit Insurance Corporation (NDIC), Umaru Ibrahim has urged states and local governments in the country to float microfinance institutions in order to access the N200 billion Medium, Small and Micro Enterprises Development Fund (MSMEDF).

    Speaking at the closing ceremony of the 2013 workshop for financial correspondents in Uyo, Akwa Ibom State, Ibrahim explained that the fund for MSMEDF would not be effective in states with large rural areas and few microfinance banks unless there are banks to support the existing ones.

    “We continue to call on the local governments, the state governments to float and nurture sustainable MFBs in their areas so as to help the poor in their areas to have access to savings and to credit without which our strive for financial inclusion and poverty eradication will not be realized. Those states that obviously don’t have enough MFBs cannot easily access that N220 billion.

    “For instance, in Jigawa even as at today, there are less than five functional MFBs even though there is a brand new airport there. The Central Bank of Nigeria (CBN) has realized that it is important for state and local governments to be given the opportunity to float and nurture MFBs.

    “This is a new policy that has been agreed upon by the CBN and it is in the realization that MFBs cannot be left in the hands of Deposit Money Banks (DMBs) because the creation and sustenance of MFBs is a very serious developmental issue and the UNDP and some other developmental organizations have amply demonstrated that,” he said.

    He further said there is a direct link between the depositors and financial inclusion.

    “As you know we charge far less premium for MFBs. They pay far less and as we speak for the last couple of years, a lot of them have not been able to pay the premium they are supposed to and yet we have not closed them down for that and have not ceased to insure them.

    “This is because we feel they have to be encouraged and as a matter fact, the 103 MFBs that were liquidated two to three years ago a lot of them did not have enough money for us to pay their depositors and we had to resort into topping up from the premium we collected from the other banks”, he said.

     

  • Sustainable living: The new face of banking

    The Central Bank of Nigeria (CBN) and Nigeria Deposit Insurance Corporation (NDIC) are asking banks to look beyond profit and return on investment (RoI) in funding projects to sustainable banking practice. The proposal, which emphasises sustainability of the environment and corporate social responsibility (CSR), was the thrust of a workshop hosted by NDIC in Uyo, the Akwa Ibom State capital, report SIMEON EBULU and  COLLINS NWEZE.

    Should a bank lend money to a company that pollutes the environment or a borrower that funds terrorist activities? Should a bank base its lending plans on return on investment and profitability only, without recourse to the nature of business the borrower does? These and many more were the issues in focus in the forum that was designed to address the new phase of banking, tagged Sustainable Banking.

    But financial sector’s key regulators: the Central Bank of Nigeria (CBN) and Nigeria Deposit Insurance Corporation (NDIC) want banks to shift focus from profitability alone and consider also other issues around sustainability, before lending.

    The United Nations Environment Programme (UNEP), through its UNEP Financial Initiative on the Environment and Sustainable Development at the Earth Summit in 1992, placed it as pertinent concern for financial systems across the world.

    It said sustainable banking in Nigeria, therefore, is focused on energising the influence of the banking sector (being financier of economic and social activities) towards transforming the longer term interest of environmental preservation and societal balancing into key parameters for allocation of capital.

    It was, therefore, not surprising that the CBN and commercial banks are working out a framework that would restrict lending to companies that adopt and implement environmentally friendly policies. By this, International Oil Companies (IOCs) and other firms that engage in activities that cuase pollution of the ecosystem will be denied loans, going forward.

    The CBN Governor, Sanusi Lamido Sanusi said if the oil companies that degrade the environment and their cohorts in other sectors are starved of funds from both local and international banks, they will have no choice than to comply.

    He spoke during the Nigeria Sustainable Finance Week conference tagged: “Moving frontiers in sustainable finance”, which was meant to attract funding to agriculture, assist in global carbon trading and protect the environment from degradation.

    For him, there is urgent need for a policy ensuring that people do not carry on their businesses in environmentally unfriendly manner and get away with it. He said the agenda would be presented to the Bankers’ Committee to agree on the way it can be realised. The reason is that as an industry, banks cannot continue to take savings and deposits from Nigerians and then, lend to companies that are destroying the environment.

    “Why must Nigeria bring multinational oil companies to destroy our environment? How do we feel about it? They can get the funds and still use it in a responsible manner. I want to see more banks coming to identify with issues of sustainability and protection of the environment,” he said.

    He said banks should not just look at profitability of lending decisions, but should also consider contributions of the borrower to the environment.

    Sanusi, however, admitted that such might be an uphill task in a highly competitive banking sector ‘where dog eats dog’. “How can banks do that when they are competing for accounts? Banks should stop looking at size of balance sheet but on how to build sustainable finance,” he said.

    For him, competition in the sector has drastically risen, compared with what was obtainable in the 80s. He therefore admitted that the policy may be stalled by banks not wanting to lose businesses to competitors that care less about the environment, where a borrower has not adhered to set standards.

    Loan process

    The CBN boss explained that for firms to secure loans from banks, they have to meet certain standards that are applicable in other parts of the world like Brazil, Egypt, Saudi Arabia and Malaysia, among others. “Our environment has been taken for granted for too long. Look at what has happened to the Niger Delta. Imagine that people in the Niger Delta cannot put a net in the river and catch fish to eat and that is a fisherman who is not an employee of the oil company. So, he has to find money to buy imported fish. So, we are saying that even though these things may look simple, they are actually the foundation to the insecurity that we have in the country,” he said.

    NDIC’s role

    Also, the NDIC has called on banks and other financial institutions to improve their commitment to addressing environmental and social impacts of their services. The corporation made this known in a statement at the conference.

    It said more lenders have realised that ignoring social and environmental issues could increase their exposure to credit, compliance and reputational risks. It said to advance sustainability, banks must seek improved performance and results on ground in affected communities and environments.

    It explained that sustainable banking is a value system, which ensures that a bank’s commercial activities do not only benefit its staff and shareholders, but also its customers and wider economy.

    It said financing of the energy sector which is usually the villain on matters of environmental degradation across the world is a trite example. This sector is perhaps the most capital intensive sector and depends on the financial system to mobilise funds for its highly capital intensive operations.

    It said until recently the industry had not given much attention to sustainability beyond ticking off environmental impact assessment on checklist for credit risk assessment for evaluation of loan applications, other jurisdictions have for decades been engraving sustainability ethos in their financial system.

    It said since the 1980s, banks in the United States had been held (under CERCLA- Comprehensive Environmental Response, Compensation and Liability Act) for the negative impact the businesses they financed had on the environment and some of them became bankrupt thereafter.

    Banks’ funding of oil projects

    Eight banks, which include Ecobank, Zenith Bank, Diamond Bank,GT Bank, United Bank for Africa (UBA), Standard Chartered Bank, Access Bank and Fidelity Bank, provided funding for local contractors operating in the nation’s oil and gas sector.

    The banks signed Memorandum of Understanding (MoU) between Total E&P Nigeria Limited, Total Upstream Nigeria Limited and eight leading banks in the country, on a $7.5 billion Nigerian Contractors’ Initiative, in Port Harcourt, the Rivers State capital.

    The programme was put together by Total to manage its value chain, including suppliers and distributors. The essence is to empower local contractors to play more active role in the oil sector through sustainable funding.

    Managing Director/Chief Executive, Total, Mr. Guy Maurice, said the key objective of the MoU and launch of the fund, is to bridge the funding gap for the company’s local contractors which includes vendors and suppliers.

    He noted that the initiative provides for sustainable funding relationship between the selected banks and Total’s indigenous contractors, adding that the programme is in line with the local content laws.

    The Total boss lauded the eight banks for scaling through the rigorous selection process, expressing confidence that, the initiative will enhance local contractors’ participation in the company’s entire value chain business.

    CBN takes case to judges

    Sanusi, while speaking at the Banking and Allied Matters conference for Judges on the theme: ‘Sustainable banking practice in Nigeria: The journey so far and the way forward’, explained that global environmental impact of businesses, which are largely financed by the banking industry suggests that the sector has not given adequate attention to environmental impact of their funding activities.

    He said the tendency to view banking as an environment friendly business is commonplace as it seemed, on the surface, not to be harming the environment and society directly.

    “However, the banking sector has been profiting from financing of environmentally unfriendly sectors. Financing of the energy sector which is usually the villain on matters of environmental degradation across the world is a trite example. This sector is perhaps the most capital intensive sector and depends on the financial system to mobilise funds for its highly capital intensive operations,” he said.

    Template for violators

    The CBN has also developed a reporting template for banks in filling their reports on loans to firms whose operations have negative impact on the environment. This is in line with the Sustainable Banking Practice being promoted by the banking watchdog.

    The CBN said sustainable banking is aimed at minimising or mitigating the negative impacts of financial institutions’ operations on the environment and local communities in which they operate especially on agric, power and the oil and gas sectors.

    According to the regulator, for the successful implementation of the principles, the institutions would be required to develop a management approach that balances the environments and social (E&S) risks identified with the opportunities to be exploited through their business activities.

     

  • Depositors funds are safe, NDIC assures

    Depositors funds are safe, NDIC assures

    Nigeria Deposit Insurance Corporation (NDIC) has assured bank depositors of safety of their deposits as well as reaffirmed its commitment to ensure a sound financial system in the country.

    NDIC’s Board Secretary and Director of Legal Services, AlheriNyako, who gave the assurance, said the NDIC will continue to do its best to ensure that deposits are protected through effective collaboration with the Central Bank of Nigeria (CBN), with a view to promoting financial sector stability.

    He spoke while receiving the award for outstanding performance by a public institution put together by the Independent Service Delivery Monitoring Group (ISDMG) at the weekend in Abuja

    He said: “In the event of a bank’s failure, we ansure that we have a prompt response system that ensures that the confidence in the banking system is maintained.”

    Earlier in his welcome address, Chairman,ISDMG, ChimaAmadi, lamented what he called the lethargic quality of service delivery in the public sector, saying however that some governmental organisations were interested in improving the quality of their service delivery through “customer focused performance based on reward scheme where providers of service get rated by the beneficiaries of the services rendered.”

  • NDIC pays N6.82b to depositors

    NDIC pays N6.82b to depositors

    The Nigerian Deposit Insurance Corporation (NDIC) paid N6.82 billion to 528,212 depositors of closed banks as at June 20, its Managing Director, Umaru Ibrahim, said yesterday.

    Speaking at the corporation’s special day at the on-going Lagos International Trade Fair, he said the figure represented an increase of N6.68 billion paid to 527,942 insured depositors as at December 31, 2011.

    Ibrahim, represented by NDIC Executive Director, Corporate Services, Mrs. Lola Abiola-Edewor, said N2.520 billion was paid to 75,520 depositors of 95 out of 103 closed Microfinance Banks (MfBs) as at June 30, 2013.

    He said N73.589 billion was paid as liquidation dividend to 250,209 depositors of Deposit Money Banks (DMBs).

    The management, he said was confident that its recent rebranding package would help the corporation construct fresh and positive perception among the numerous depositors and stakeholders across the country.

    According to him, by so doing, the Corporation would occupy a prime spot in the hearts and minds of the depositors and other stakeholders who would continue to trust its commitment to protect depositors funds.

    He said, the continuous participation of the NDIC in Lagos International Trade Fair since 2002 was informed by its commitment to reach out to stakeholders in the quest to enhance public awareness on the corporations mandate and activities.

    “In order for the new NDIC brand to continue to efficiently and effectively on its mandate and also be a beacon of hope and a bastion of trust and reliability to the average Nigerian depositors, the NDIC act would need to be fortified in view of developments in the International financial system in general, and the Nigerian financial service industry in particular.

    “I am pleased to inform you that the NDIC had proposed amendment to the current Act. The amendments are aimed at strengthening the corporation’s supervisory capabilities and addressing other challenges in the area of liquidation of failed financial institutions,” he said.

    Ibrahim added that the amendments are also meant to ensure compliance with the core principles for effective Deposit Insurance Systems.

    He said that the Corporation was established under NDIC Act 2006 to protect depositors’’ funds and provide a financial safety net for the banking industry.

    He however said that in the event of closure of a bank, depositors of deposit money banks are entitled to claim up to a maximum guaranteed sum of N500,000 each and N200,000 each for depositors of microfinance banks and primary mortgage banks.

     

  • NDIC stresses need for microfinance training institute

    The Nigeria Deposit Insurance Corporation (NDIC) has lent its support to the establishment of a world-class microfinance training institute in the country to enhance capacity building in the banking subsector.

    The Managing Director/Chief Executive of NDIC, Alhaji Umaru Ibrahim, who made this known , also advocated the incorporation of All Women Microfinance Bank (MFB) to be wholly owned by Women non-governmental organisation (NGOs) in the country, to protect the interest of small depositors and boost public confidence in the microfinance banking sub sector.

    Ibrahim, who made the call when he hosted the Executive Members of the National Association of Microfinance Banks (NAMB) in his office, said NAMB’s request for unit MFBs to have multiple branches and operate cash centres in local government areas of their operations was before a joint committee, and it must be critically analysed and judged based on its merit. He, therefore, advised the association to await the recommendations of the committee on the matter.

    The NDIC boss reminded the association of the fundamental role of MFBs as grassroot business units toward enhancing financial literacy and consumer protection in promoting financial inclusion.

    He emphasised that only happy and satisfied depositors could guarantee the much needed public confidence in the banking system, saying that the NDIC had put in place a 24-hour toll free Help Desk to respond to all enquiries from depositors across the country.

    Ibrahim lamented the low level of payment of assessed premium among the MFBs which necessitated the need for a tripartite agreement between the corporation, MFBs and their correspondent banks to facilitate prompt collection of premium in the subsector.

    He advised MFBs to avoid the extreme situation that would warrant the withdrawal of NDIC insurance cover on erring MFBs. Such a move, he said, would not augur well for the advocacy of financial inclusion and development of the subsector.

    According to him, the purpose for which the corporation set aside N16 billion intervention fund to rescue technically insolvent MFBs and Primary Mortgage Banks (PMBs) was based on defined criteria instead of the wrong impression that it was meant as a form of financial stability fund for MFBs.

    He reiterated that N2.5 billion of the fund was used to reimburse the depositors of 103 MFBs liquidated in 2010 and, therefore, advised the NAMB to take a cue from the deposit money banks (DMBs) by mobilising resources for the establishment of a financial resolution sinking fund.

     

    He informed the association that the NDIC in collaboration with the judiciary and the police had concluded plans to prosecute operators and debtors who were culpable for the breach of trust and abuse of office that contributed to the collapse of the 103 MFBs in 2010.

    A case in point, he said, was that of Integrated MFB which accounted for over 60 per cent of the fund lost in the subsector. This would go a long way to institute the right attitude and financial discipline in the subsector for the future.

    Ibrahim also emphasised the need for adequate risk management framework and sound corporate governance practices as well as self regulation and market discipline to promote confidence and stability in the subsector.

  • ‘Create Microfinance Training Institute’

    ‘Create Microfinance Training Institute’

    The Nigeria Deposit Insurance Corporation (NDIC) has urged thecreation of a world class Microfinance Training Institute in the country to enhance continuous capacity building in the banking subsector.

    The Managing Director / Chief Executive of NDIC Alhaji Umaru Ibrahim, who made the call, also advocated for the incorporation of All Women Microfinance Bank (MFB) wholly owned by Women NGOs in the country, to protect the interest of small depositors and boost public confidence in the microfinance banking sub sector.

    Alhaji Ibrahim, made the call when he played host to the Executive members of National Association of Microfinance Banks (NAMB) who paid him a courtesy visit in his office, said that the NAMB request for Unit MFBs to have multiple branches and operate cash centres in local government areas of their operations was before a joint Committee which must be critically analysed and judged based on its merit. He, therefore, advised the Association to await the recommendations of the Committee on the matter.

    The NDIC boss reminded the association of the fundamental role of MFBs as grassroots business units toward enhancing financial literacy and consumer protection in promoting financial inclusion.

    He emphasized that only happy and satisfied depositors could guarantee the much needed public confidence in the banking system, saying that the NDIC had put in place 24 hour toll free Help Desk to respond to all enquiries from depositors across the country.

    Alhaji Ibrahim lamented the low level of payment of assessed premium amongst the MFBs which necessitated the need for a tripartite agreement between the Corporation, MFBs and their correspondent banks to facilitate prompt collection of premium in the subsector.