NDIC liquidates 424 Deposit Money, Microfinance Banks, pays N129.6bn to depositors

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Uba Group

BY VICTORIA ONU, ABUJA

Between 1988 when it was established and 2021, the Nigeria Deposit Insurance Corporation has liquidated a total of 424 Deposit Money, Microfinance, and Primary Mortgage Banks whose licences were revoked by the Central Bank of Nigeria.

The corporation is also currently settling the liquidation dividends of depositors of the banks.

The Director, Insurance and Surveillance Department of the NDIC, Galadima Gana, who confirmed, this noted that the Corporation had paid N129.6bn to depositors of these failed institutions.

According to Gana, the Corporation had closed 325 MFBs, 50 PMBs, and 49 DMBs whose licences were revoked by the CBN with minimal effects on the stability and confidence in the banking sector.

Gana added that NDIC had cumulatively paid N8.27bn to insured depositors of DMBs, N3.38bn to insured depositors of MFBs, and N11bn to insured depositors of PMBs.

He said the payment to uninsured depositors, creditors, and shareholders of DMBs cumulatively stood at N100.85bn, N1.27bn, and N4.83bn, respectively.

He said this represented 51.07 per cent, 73.13 per cent and 92.81 per cent of the respective amounts.

The Managing Director of the NDIC, Bello Hassan, explained on the sidelines of the event that the corporation was settling the liquidation dividends of depositors of the banks.

He said, ”One of our mandates is also to liquidate licence deposit institutions whose deposit has been revoked by the CBN.

“So you have various categories that are currently in liquidation, the Deposit Money Banks (DMBs), Micro Finance Banks (MFBs), and Primary Mortgage Banks (PMBs).

“As liquidator, what we do immediately there is a revocation of licence is to pay the maximum insured amount.”

After that, he explained that the corporation “proceeded to recover the loans and advances” granted by the liquidated institutions before revocation and “also realise the assets” left behind “so that we can pay it to the depositors.”

“We only pay the maximum insured amount at the point of liquidation then, subsequently, begin to pay depositors and after that, we wind up, but the payment is currently ongoing,” Hassan added.

He said the NDIC was planning an upward review of the Deposit Insurance Fund in order to effectively address the financial crisis that might arise when a bank collapses.

The Deposit Insurance Fund is used to meet the primary obligations of the Corporation in the form of payment of guaranteed sums and provision of financial assistance to eligible insured institutions.

The operations of the NDIC are financed from the proceeds of investment such as Treasury Bills and Federal Government Bonds as the Corporation does not receive government subvention for its operations.

The DIF of the NDIC as of March this year was less than N2trn and it had affected the ability of the Corporation to effectively discharge its mandate in the areas of distress resolution of failed banks.

Hassan noted that the Corporation was also mulling the review of its determination of premium by banks to make it more risk-based.

He added that the revised framework would enable the NDIC to accurately determine the amount that would be sufficient to meet any liability that might crystallise on the deposit insurer.

He said that the review would be implemented in line with Section (2) subsection (1) of the NDIC Act.

The subsection states, “The Corporation shall have responsibility for giving assistance to insured institutions in the interest of depositors, in case of imminent or actual financial difficulties particularly where suspension of payments is threatened to avoid damage to public confidence in the banking system.”

The NDIC boss added that the Corporation was also considering other reforms to ensure that it delivers on its mandate to ensure the stability of insured institutions.