The Senate Committee on Banking, Insurance and other financial institutions has expressed concern over the new minimum capital requirement prescribed for various categories of Microfinance Banks in the country by the Central Bank of Nigeria (CBN).
Speaking during an oversight visit to the Nigeria Deposit Insurance Corporation (NDIC), the Chairman of the committee, Dr Rafiu Adebayo Ibrahim said that the policy will be inimical to the objectives of the financial inclusion strategy.
The financial inclusion strategy aims to bring 80 per cent of Nigeria’s adult population into the formal financial system by the year 2020, which is barely two years away.
According to the new capital requirements for MFBs released recently, by the apex bank, unit MFBs had their capital base raised from N20 million to N200 million; and N100 million to NI billion, and N2 billion to N5 billion for unit, state, and national MFBs respectively.
A statement from NDIC signed by Head, Communications and Public Affairs, Mohammed Kudu Ibrahim said the committee expressed a strong Commitment for the accelerated amendment of the Nigeria Deposit Insurance Corporation (NDIC) Act, 2006, to eliminate the gaps that have hindered the full realization of the public policy objectives of the implementation of the Deposit Insurance System (DIS) in Nigeria.
Updating the Senate Committee on the issues of the long suffering depositors of Savanah Bank, Fortis MFB, Aso Savings and Union Homes, the Managing Director/Chief Executive of the NDIC, Umaru Ibrahim, said that unless the Act is amended speedily, the corporation is “handicapped in acting to end the plight of depositors of the institutions.
Using the case of Savanah bank as an example, the NDIC boss added that the NDIC Act, as presently enacted, inhibits the Corporation to reimburse depositors since their bank licences were yet to be revoked due to protracted litigation. The NDIC boss thereafter made appealed to the Committee to amend the NDIC Act.
He also told the committee the Corporation’s response to the revocation of the 153 microfinance bank operating licenses and six primary mortgage Banks (PMBs) by the CBN.
He said that already, the corporation has commenced payment of depositors of 25 MFBs and deposits verification of 50 others.
He listed the challenges encountered by FMBs in particular to include non-performing loans, insider credit and abuse, non-compliance with extant regulations on their establishment and the overbearing indulgence in other fringe operations, along with poor earnings.
The NDIC boss further used the opportunity to inform members of the Committee of the strong resolve and commitment of the Corporation to assist in the investigation and prosecution of all those who contributed to the collapse of the defunct Skye Bank.
Responding, the Chairman of the Committee commended the Corporation for the excellent quality of its reports on the supervision of banks which have become the benchmark in the industry.
The committee pledged mutual cooperation to confront emerging issues in the financial services industry such as Block-chain Technology, Financial Inclusion, Cyber Crime, Digital Banking, Consumer Protection and the provision of credits to MSMEs.
