NDIC PAYS N2BN TO MFBS' CUSTOMERS … TO PROSECUTE MDS OF CLOSED 103 MFBS

By Amaka Abayomi
The Nigeria Deposit Insurance Corporation (NDIC) has said that it has paid over N2 billon to over 69,000 depositors of closed microfinance banks, MfBs, while the Managing Directors of the liquidated 103 MfBs would be prosecuted.

Speaking at the 2011 Editors' Forum, officials of the NDIC said the payment, which represents 41 per cent of total insured amount of over N4.94bn, was paid to the customers of the affected bank as at July 2011.

According to the NDIC, 'In collaboration with the Central bank of Nigeria, CBN, target examinations were conducted on all MfBs in the system in February 2010, and these revealed the grave condition of many MfBs, which eventually led to the revocation of operating licenses of 103 MfBs.

'Though N8.33m has been recovered, to date, in respect of closed MfBs, but we have appointed some debt collection agents to enhance the pace of debt recovery.'

Commenting on the basic statistics on insured MfBs, the NDIC said out of the 868 operating MfBs, 593 report to the NDIC. With 1,541,468 total depositors and total deposits of N68.60bn, the insured deposits is N51.45bn, 1,530,677 insured depositors are fully covered, while 99.3 per cent of insured depositors are fully covered.

The CBN had, on September 24, 2010, revoked the operating licenses of 224 MfBs on basis that they were 'terminally distressed and technically insolvent'. To this end, NDIC commenced liquidation of the affected banks with its staff deployed to branches of the 224 closed MfBs with the aim of verifying deposit liabilities of each bank with a view to expediting payment of insured deposits.

Payments of insured fund to depositors began from December 6th, 2010, while the second round of payments started January 17th, 2010.

Meanwhile the Managing Director of NDIC, Alhaji Umaru Ibrahim, has disclosed that the managing directors of the 103 MfBs axed by the CBN will be prosecuted.

Ibrahim said efforts are being made to prosecute the people that ran the banks aground while the Nigerian Police are preparing documents that will facilitate the banks' chiefs' appearance in court soon. He said: 'We are arranging with the Police to prosecute MfB owners that are battling with insolvency.

We are using the former staff of the banks to collect the debts incurred by the banks. Such workers know those that collected the loans, hence our resolves to use them for debts collection. We are doing debt recovery across the country, to ensure the growth of the institutions'.

He said NDIC has visited the branches of the failed banks to ascertain the level of financial misconducts, and further arranged with the agent banks on how to pay their depositors.

'The Deposit Insurance Fund (DIF) for MfBs has been increased from N100,000 to N200,000. The deposit insurance is for the poor, and not the rich that have money to hire consultants who can follow up their accounts. The new coverage level of N200,000 was used to settle depositors of the 103 MfBs that closed shop in 2010', he said.

Also, industry sources said many MD were quizzed by the police, immediately after their banks were declared insolvent by the apex bank. The sources, who spoke on condition of anonymity, said the interrogation was done to ascertain the level of financial malpractices in those banks, and further prepare grounds for the trails of their owners. They said the affected operators were running the banks like commercial banks, and in the process burnt their fingers.