MICROCAPITAL BRIEF: Nigerian Microfinance Bank Classic Microfinance Ordered to Sell Assets to Pay Debts to Former Depositors

Abeokuta-based microfinance bank (MFB) Classic Microfinance has been reportedly forced to sell off assets to pay debts it owes to its former depositors. The move is part of a broader effort in Nigeria to repay depositors of over 100 MFBs—including Classic Microfinance—whose licenses were permanently revoked in 2010 after being deemed “terminally distressed and technically insolvent.”

The sale of the assets, which included vehicles, air conditioners, computers, television sets, tables, fans, generators and calculating machines, was presided over by the Nigeria Deposit Insurance Corporation (NDIC), an agency of the federal government of Nigeria that protects depositors by guaranteeing the settlement of insured deposits.

One of the buyers of the assets, Oladipo Oyewo, said that as much as he supports “the sales of the bank properties to offset the outstanding unpaid money of the innocent customers, the NDIC authority should also ensure that officials involved in the collapse of the banks must be brought to book [1].”

By John Howard-Smith, Research Associate

About Central Bank of Nigeria (CBN): Central Bank of Nigeria (CBN), established in 1958, is the central banking authority of the country. As defined by the 1958 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 July 2010, CBN reports total assets of NGN 7.37 trillion (the equivalent of USD 48.6 billion).

About Nigeria Deposit Insurance Corporation (NDIC): The Nigeria Deposit Insurance Corporation (NDIC) is an 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.

[1] Next. “Microfinance Bank Property to Pay Off Debts”, http://234next.com/csp/cms/sites/Next/Money/Finance/5680260-147/microfinance_bank_sells_property_to_pay.csp

MicroCapital.org story, October 1, 2010: “MICROCAPITAL BRIEF: Central Bank of Nigeria Revokes Licenses of 224 Microfinance Banks”, https://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-revokes-licenses-of-224-microfinance-banks/

MicroCapital.org story, October 29, 2010: “MICROCAPITAL BRIEF: Central Bank of Nigeria (CBN) Gives Provisional Approval for 121 New Microfinance Bank (MFB) Licenses”, https://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-cbn-gives-provisional-approval-for-121-new-microfinance-bank-mfb-licenses/

MicroCapital.org story, January 24, 2011: Nigeria Deposit Insurance Corporation (NDIC) Begins to Repay Customers of Failed Microfinance Banks, https://www.microcapital.org/microcapital-brief-nigeria-deposit-insurance-corporation-ndic-begins-to-repay-customers-of-failed-microfinance-banks/

MicroCapital.org story, February 17, 2011: “MICROCAPITAL BRIEF: Nigeria Deposit Insurance Corporation (NDIC) Meets with Directors of Liquidated Microfinance Institutions (MFIs) to Discuss Customer Payouts”, https://www.microcapital.org/microcapital-brief-nigeria-deposit-insurance-corporation-ndic-meets-with-directors-of-liquidated-microfinance-institutions-mfis-to-discuss-customer-payouts/

MicroCapital’s Microfinance Universe profile: Central Bank of Nigeria (CBN), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Central+Bank+of+Nigeria+(CBN)

MicroCapital’s Microfinance Universe profile: Nigeria Deposit Insurance Corporation (NDIC), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Nigeria+Deposit+Insurance+Corporation+(NDIC)

Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/

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