Nigeria Deposit Insurance Corporation takes over 46 microfinance banks after license revocation

The Nigeria Deposit Insurance Corporation (NDIC) has officially assumed control of 46 microfinance banks whose operating licenses were revoked by the Central Bank of Nigeria. The NDIC has been appointed as the liquidator for these institutions, a move that has prompted immediate concern among depositors and financial experts regarding the stability of the micro-economic landscape.

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Members of the public are strongly advised against any unauthorized transaction with the closed banks, or any attempt by individuals to remove, conceal, retain, or interfere with the assets, records, or properties of the banks, as this may constitute a violation of the law that could attract appropriate legal consequences.

Hawwau Gambo, Head of Communication and Public Affairs at the NDIC, issued a directive urging the public to avoid any unauthorized dealings with the closed banks. She stressed that interfering with the assets or records of these institutions could lead to legal consequences. The NDIC has mobilized resources to begin the process of orderly closure, including verification and payment of insured sums to eligible depositors.

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The NDIC has commenced the process of the orderly closure of the failed banks with their immediate takeover, verification and payment of insured sums to eligible depositors.

However, the widespread closure has raised alarms among financial analysts and consumer advocates. Professor Uju Ogubunka, President of the Bank Customers Association of Nigeria, warned that the removal of these 46 banks creates a significant vacuum in local credit systems and financial services. He noted that the aggressive regulatory action could undermine years of work promoting financial inclusion, disproportionately affecting market women, smallholder farmers, and small business owners.

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The economy, of course, would also have to suffer for it because the roles they have been playing within the economy, they will no longer play those roles.

Despite these concerns, both regulators and the NDIC have assured stakeholders that the liquidation process will adhere to due process to mitigate customer distress. The NDIC plans to use the banks' former branches for depositor verification and to disburse funds under newly revised insurance caps. Professor Ogubunka acknowledged that while the intervention is painful, it is a necessary step.

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If we don’t have other banks and financial institutions to absorb those roles, then that means there will be a vacuum, or at least there will be limitation in those services.