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Published On: Wed, Mar 5th, 2014

NDIC budgets N135bn for anticipated failed banks

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By Patrick Andrew

The Nigeria Deposit Insurance Corporation (NDIC) has earmarked N135 billion to pay off depositors of likely failed banks in the 2014, even as it gave reasons for the CBN’s liquidation of 83 licenced microfinance banks.

NDIC’s Managing Director, Alhaji Umaru Ibrahim, disclosed yesterday before the Senate Committee on Banking and Currency, when he appeared to defend his agency’s 2014 budget stressing that provision for the anticipated failed bank was a necessary preparation for the ‘rainy day’.

“Funding gap is what we do to prepare for the rainy day. We hope that the rainy day does not come. But any insurance should prepare for the rainy day. As we speak, no bank benefited from the fund in 2013,” he said adding that the NDIC built confidence and stability of the banking industry through conscious supervision and regulation of the banking system.

He said one of the ways confident was built was in the area of payment of depositors from banks that had been liquidated. The director said the corporation was working assiduously to rebranding using four cardinal attributes: promote financial literacy, consumer protection, and collaboration with other agencies driven by in-built confidence.

Speaking further on the rebranding, Ibrahim said the intention was to re-orientate both depositors and staff of the corporation in order to create understanding in the sector.

“We have stepped up awareness and campaigns about our activities to make sure that some members of the public put up claims of their locked up deposits in liquidated financial institutions. We have

appointed some banks as agents with the assistance of our various zonal offices that we had established in various parts of the country.”

Meanwhile, the NDIC boss has explained why the CBN recently withdrew the licences of 83 out of the about 900 microfinance banks. “There is no doubt that the operations of some of the microfinance banks have become epileptic. Some of the microfinance banks existed only on paper while some are used to defraud Nigerians.” Peoples Daily recalls that sometime last month, the CBN had announced

that it was withdrawing the licences of some microfinance banks for non-performance.

On mobile banking, a vogue that is gradually gaining ground in Nigeria, the NDIC director said, “We are partnering with the Central Bank of Nigeria to discuss the ways and means of ensuring depositors

of mobile banks and depositors of mobile phone system.

“Mobile banks are emerging and seven banks had been licensed by the CBN to get involved in mobile banking and there are 11 non-banking telecommunications related institutions that had been licensed to offer mobile money service.

“This needs to be regulated. The depositors of the institutions offering mobile banking needed to be identified and protected.

The whole essence of this is that if we have millions of such people sending and collecting money through mobile banking system.

“We want to ensure that in event of any crisis, they are covered. Unless they have that assurance of being covered, you don’t expect them to accept to participate in this revolutionary project that is coming on board,” he concluded.

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