MICROCAPITAL BRIEF: Central Bank of Nigeria Bans Debtors Owing More than $1.5m to Liquidated Banks from Seeking New Credit

The Central Bank of Nigeria (CBN), the country’s central banking authority, recently banned the extension of new credit to debtors owing over NGN 250 million (USD 1.5 million) to insolvent banks in the country. As reported by the Daily Independent, a Nigerian newspaper, CBN took the action at the behest of the Nigeria Deposit Insurance Corporation (NDIC), a quasi-independent agency of the federal government that insures deposit-taking financial institutions, which has been experiencing difficulties in recovering debts owed to closed banks from as far back as 1994.

According to a statement attributed to Mr Umaru Ibrahim, managing director of NDIC, the names of the blacklisted debtors will be published by unspecified private-sector credit bureaus, as well as CBN’s Credit Risk Management System (CRMS), a database of credit-related information on borrowers.

CBN reported total assets of NGN 13.8 trillion (USD 84 billion) as of November 2013.

By A’kos Szebeni, Research Associate

About the Central Bank of Nigeria (CBN)

The Central Bank of Nigeria (CBN) was established in 1958 as Nigeria’s central banking authority. As defined by the act of parliament that created CBN, its statutory mandates are as follows: “to issue legal tender currency; to maintain external reserves; to safeguard the international value of the legal tender currency; to promote monetary stability and a sound financial system in Nigeria; and to act as banker and financial adviser to the Federal Government.” As of November 2013, CBN reports total assets of NGN 13.8 trillion (USD 84 billion).

About Nigeria Deposit Insurance Corporation (NDIC)

The Nigeria Deposit Insurance Corporation (NDIC) is a quasi-independent agency of the federal government of Nigeria. Its purpose is to protect depositors and guarantee the settlement of insured funds when a deposit-taking financial institution can no longer repay its deposits, thereby helping to maintain the stability of the financial system.

Sources and Additional Resources:

Daily Independent, “CBN, NDIC order banks to blacklist customers owing above N250m,” http://dailyindependentnig.com/2014/05/cbn-ndic-order-banks-blacklist-customers-owing-n250m/

MicroCapital, March 3, 2014, “Central Bank of Nigeria Announces Closure of 83 Microfinance Banks (MFBs), Denies Shutdown of Additional 600 MFBs,” https://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-announces-closure-of-83-microfinance-banks-mfbs-denies-shutdown-of-additional-600-mfbs/

MicroCapital, April 15, 2013, “Nigeria Deposit Insurance Corporation to Bailout Microfinance Institutions, Primary Mortgage Banks,” https://www.microcapital.org/microcapital-brief-nigeria-deposit-insurance-corporation-to-bailout-microfinance-institutions-primary-mortgage-banks/

MicroCapital, May 18, 2012, “Central Bank of Nigeria (CBN): MSME Development Fund Not for Bailing out Microfinance Banks,” https://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-cbn-msme-development-fund-not-for-bailing-out-microfinance-banks/

MicroCapital, April 7, 2012, “Nigerian Deposit Insurance Corporation (NDIC) Launches Investigation into Managers, Directors of Distressed Microfinance Banks,” https://www.microcapital.org/microcapital-brief-nigerian-deposit-insurance-corporation-ndic-launches-investigation-into-managers-directors-of-distressed-microfinance-banks/

MicroCapital, April 3, 2012, “Nigerian Deposit Insurance Corporation (NDIC) Disburses $12.6m to Depositors of Closed Nigerian Microfinance Banks,” https://www.microcapital.org/microcapital-brief-nigerian-deposit-insurance-corporation-ndic-disburses-12-6m-to-depositors-of-closed-nigerian-microfinance-banks/

MicroCapital Universe Profile: Central Bank of Nigeria (CBN), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Central+Bank+of+Nigeria+%28CBN%29

MicroCapital Universe Profile: Nigeria Deposit Insurance Corporation (NDIC), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Nigeria+Deposit+Insurance+Corporation+%28NDIC%29

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