NDIC to pay insurance coverage to failed 154 MFBs, 6 PMBs soon

The Nigeria Deposit Insurance Corporation (NDIC) will soon commence the payment  of insurance coverage to verified depositors of 154 failed Microfinance banks and six  Primary Mortgage Banks (PMBs) in fulfillment of its core mandate.
Umar Ibrahim, managing director/CEO, who disclosed this Lagos at the Corporation’s special day at the ongoing lagos international trade fair! said the corporation has commenced verification of insured depositors.
the CBN recently revoked the licences of 154 MFBs and 6 PMBs due to their insolvency. The action became necessary 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, and further worsened by boisterous life style of Management that remained at variance with the philosophy of microfinance banking operations.
“From the record obtained so far, majority of the depositors especially in the MFBs, have less than N200,000.00 in their accounts, which implied that the NDIC will hopefully cover 100% of the deposited funds in the MFBs”, Ibrahim said.
He said the Corporation will continue to work closely with the CBN to ensure effective supervision of the banks so as to ensure strict adherence to rules and regulations guiding banking operations. This is with a view 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. The NDIC, in collaboration with other stakeholders, will continue to promote good corporate governance in the nation’s banking system.
Ibrahim noted that the NDIC, in collaboration with the CBN, adopted bridge bank option to resolve the failure of Skye Bank Plc. A bridge bank is a temporary bank created to operate a failed bank until a buyer can be found.
According to him, With this expert arrangement, the Polaris was able to continue banking operations in the 277 branches of the bank, over 6000 jobs were 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 for others.
To further enhance financial system stability in subsequent periods, and forestall the reoccurrence of disappointments, he said the NDIC has embarked on various public awareness campaigns explaining the role and responsibilities of the customers to their banks, and vice versa. This will essentially instil market discipline on the part of the depositors to ever be more vigilant in choosing financial institutions to bank with.  Public awareness initiatives adopted so far include – placement of TV and Radio jingles in local dialects, organizing annual workshop for Business Editors and Finance Correspondents Association of Nigeria, town-hall meetings with relevant stakeholders and civil societies, as well as participation in trade fairs across the nation to promote financial literacy among the youths and adults alike.

Hope Moses-Ashike