Depositors’ funds secured with NDIC —Microfinance Banks allay fears over revoked licenses

Joshua Ukute, president of the National Association of Microfinance Banks, has reassured depositors that their money is secure despite the Central Bank of Nigeria (CBN) revoking the operating licence of some microfinance banks.

Ukute stated that the group was coordinating with the regulators and the impacted microfinance institutions for a proper winding down in an interview with Channels Television on Thursday.

“We know that the Central Bank had since 2019 given instruction to microfinance banks to recapitalise and then after, when we came on board a lot of issues about COVID, post-COVID and a lot of other challenging issues,” he said.

“But as an association, we are working with various regulators and the banks affected… If you look at that list, a lot of microfinance banks are on that list owing to a lot of challenges like the economy, managing their businesses just like any other businesses are struggling for a while.

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“Microfinance banks are regulated by the Central Bank of Nigeria and the NDIC (Nigeria Deposit Insurance Corporation), so their funds are well-secured under the deposit insurance covered by NDIC. So, definitely no depositor should lose their fund.”

The country’s 132 microfinance institutions, four primary mortgage institutions, and three finance firms had their operational licences cancelled by the central bank.

The revocation procedure was announced in the Federal Government’s official gazette, which was posted on the CBN website on Tuesday.

The apex bank said the financial institutions “failed to fulfil or comply with the conditions subject to which their licences were granted; or failed to comply with the obligations imposed upon them by the Central Bank of Nigeria in accordance with the provisions of Banks and Other Financial Institutions Act (BOFIA) 2020, Act No. 5″.

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