NDIC Begins Verification, To Pay 100% Depositors Of 154 Closed MFBs

The Nigeria Deposit Insurance Corporation (NDIC) says it has started verification of the claim by depositors of the 154 microfinance banks whose licenses were recently revoked by the Central Bank of Nigeria (CBN) for various reasons, including insolvency.
This, according to the Ibrahim Umar, Managing Director and Chief Executive of the corporation said payment of verified customers will soon begin, in line with its core mandate.
Umar, who was addressing the 2018 annual workshop for Finance Correspondents of Nigeria (FICAN) and business editors in the country, he alluded to records showing that “majority of the depositors, especially in the MFBs, have less than N200,000 in their accounts, which implied that the NDIC will hopefully cover 100% f the depositors.”
Represented by Muhammed Yayangida Umar, Director, Special Insured Department (SID) at the cooperation, he said some of the MFBs and six primary mortgage banks were closed “because some were found to have insufficient assets to meet their liabilities, while others had their capital to risk-weighted assets ratio and regulatory capital below the minimum prescribed by the CBN.”
Speaking on the theme: Financial inclusion, consumer protection and the evolution of virtual currencies in Nigeria, this is besides the problem that the banks had ceased to undertake the type of banking business for which they were issued licenses for over six months, besides those that had gone into voluntary liquidation.
Speaking on the establishment of Polaris Bank Ltd, a bridge or temporary institution used to take over the assets and liabilities of the defunct Skye Bank Plc, until a buyer can be found.
“The pay-out option for example, would have resulted in depositors not assessing their deposits as they would be paid their guaranteed deposits only, in the first instance. Subsequently, payment of excess uninsured deposits would remain uncertain, protracted and entirely dependent on the level of unrealizable assets.
“However, with the bridge bank option, depositors of the defunct Skye Bank Plc, are guaranteed access to their total deposits,” he added, stressing that bridge banking is less costly to the entire macro-economy.
For example, he noted that the bridge banking arrangement saved a total of 6,000 jobs of its staff across 277 branches, besides securing the deposits in excess of N949.6bn as at June 2018.