NDIC refunds N1.2bn to 34,000 depositors of microfinance banks

From Anthony Nwachukwu, Lagos 

The Managing Director, Nigeria Deposit Insurance Corporation (NDIC), Bello Hassan, has revealed that the agency has refunded over N1.2 billion to about 34,000 depositors of 179 microfinance banks whose licences were revoked by the Central Bank of Nigeria (CBN).

Hassan, disclosed this yesterday, during the 2023 Sensitisation Seminar for Judges of National Industrial Court of Nigeria (NICN) and members of Investments and Security Tribunal, held in Port Harcourt.

Represented by the Executive Director, Operations, NDIC, Mustapha Ibrahim, Hassan explained that the seminar was imperative for stakeholders to understand the workings and nuances of NDIC and also its operational activities.

Speaking on the theme of the seminar, “Strengthening Depositors’ Confidence in Banks and Other Financial Institutions through Speedy Dispensation of Justice,” Hassan said the programme was anchored on the need for strategic partnering and collaboration with the judiciary for the promotion of financial System stability in Nigeria.

He said, “Our first mandate is deposit guarantee, in other words any deposit institution that we found, we have to guarantee payment of depositors.

“The recently closure of 179 microfinance banks and four primary mortgage institutions and we have been resolving them in an orderly manner.

“So far we have been able to settle over 34,000 depositors of microfinance banks whose licenses were recently revoked by CBN and we paid N1.2 billion to settle these 34,000 depositors of microfinance banks and it is still an ongoing process, liquidation is not something you accomplished in a day or two.”

The Chief Executive Officer of the NDIC, further stated that the statutory functions of corporation include Deposit Guarantee, bank supervision, distress resolution and bank liquidation, saying that upon the revocation of banking license, the NDIC has the statutory powers, to liquidate the insured financial institution whose license has been revoked.

He noted some of the challenges facing the NDIC included, “Execution of judgement against the Corporation for liabilities of banks in-liquidation. Attachment of the assets of the Corporation (NDIC) including garnishee of Corporation’s corporate accounts.

“Difficulties in recovery of debts owed the failed banks.  Difficulties in bringing to book (criminal prosecution) directors, managers and officers of failed banks that might have contributed to the collapse of their banks.”

He listed others to include lack of specialised winding-up rules for failed financial institutions as provided for in Section 56(1) and (2) of the NDIC Act 2023; increase in cases by ex-staff of banks under liquidation on labour law matters and issues relating to stocks and securities matters.”

According to him, despite the noted challenges, the CBN and NDIC had recorded tremendous achievements in the intervention and resolution of problem banks through the various resolution options such as, bridge bank mechanism, purchase and assumption option, among others.

“The corporation over the years has successfully liquidated many DMBs, MFBs and PMBs whose licenses were revoked by the CBN, and their depositors as well as other claimants paid, with some of them fully settled from debts recovered and the assets realised.”

The Chairman, Investments and Securities Tribunal, Amos Isaac Azi, said the tribunal by law was expected to start and finish a matter within 90 days, adding that the tribunal entertains only capital market related issues.

He said “The Investments and Securities Tribunal is a special purpose court set up to expeditiously deal with disagreements in the Nigerian capital market. “By law, within 90 days we must start and finish a matter, Nigeria so far has received tremendous international commendations for setting up this tribunal.”

On his part, President of NICN, Justice Bakwaph Kanyip, said speed and flexibility were the guiding principles in the adjudication of labour disputes.

“For us at the NICN, we have always been guided by this mantra: it is better to get a bad judgment quickly than a good one too late. This may sound like heresy. But to the world of work, the dispensation of labor justice is one where time is of the utmost essence.”

The NICN boss also frowned at a number of practices in the financial sector, which he said called for concern, not just for workforce, but also for the overall development of the country.

“The practice of giving employees targets in sourcing for deposits. This in itself is not a problem. The problem, however, when those employed and given targets are mainly female employees.

“The practice of giving employees targets in sourcing for deposits. This in itself is not a problem. The problem, however, when those employed and given targets are mainly female employees.

“Aside from this raising issues of discrimination in the workplace (especially where male employees are not so employed), the fact that it is female employees that are unleashed on the unsuspecting public and the manner this comes through is a cause for concern.”