The Nigeria Deposit Insurance Corporation (NDIC), an agency of the federal government of Nigeria that protects depositors by guaranteeing the settlement of insured deposits, recently met with the directors of nineteen liquidated microfinance institutions (MFIs) to discuss how to repay customers’ deposits. In September 2010, the Central Bank of Nigeria revoked the licenses of 224 MFIs on the basis of insolvency, poor operations management, high levels of non-performing loans and corrupt management. While 121 of these MFIs have been issued provisional licenses to resume operations, the remainder appear to be closed permanently. Since Nigeria’s MFIs are insured by NDIC, depositors of these institutions are insured for deposits of up to NGN 200,000 (USD 1,310) per person. However, the directors of the liquidated deposit-taking MFIs would need to make their customers’ deposit records available before NDIC can make payments to the customers.
NDIC issued a public notice in late 2010 asking for the directors to provide this deposit information. According to NDIC authorities, at least six directors have stepped forward with the information, thus avoiding possible legal action. An anonymous source reported to be close to NDIC said that deposits in the 224 banks total “almost NGN 20 billion (USD 13.1 million).”
By Julie Moksim, Research Associate
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.
About Central Bank of Nigeria (CBN): CBN, established in 1958, is Nigeria’s central banking authority. 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).
Sources and Additional Resources:
Nigerian Compass: NDIC, Microfinance Directors Meet over Customers’ Deposit Records” by Biodun Durojaiye, February 11, 2011, http://www.compassnewspaper.com/NG/index.php?option=com_content&view=article&id=74970:ndic-microfinance-directors-meet-over-customers-deposit-records&catid=43:news&Itemid=799
MicroCapital.org Brief, 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 Brief, October 1, 2010: 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’s Microfinance Universe profile: Central Bank of Nigeria (CBN)
MicroCapital’s Microfinance Universe Profile: 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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