By Babajide Komolafe
The Nigeria Deposit Insurance Corporation (NDIC) has moved to investigate the status of all microfinance banks (MFBs)Â in the country.
This, according to the Corporation, followed the outcome of a joint examination exercise with the Central Bank of Nigeria (CBN) and the flood of petitions from depositors of MFBs that have closed shop.
In a statement issued and signed by the Head, Public Affairs Unit of the Corporation, it stated â€œThe Nigeria Deposit Insurance Corporation (NDIC) has embarked on a nationwide target examination of all licensed MFBs operating in the country.
The target examination, which commences this week, is intended to determine the actual number and financial condition of all the licensed MFBs, identify those with signs of distress in order to decide on the appropriate distress resolution options and also to identify the actual number of those that have closed shop.
In pursuance of Section 2 of the NDIC Act No. 16 of 2006, which empowers the Corporation to insure deposit liabilities of all licensed microfinance banks since 2008, the NDIC is to embark on the target examination to maintain depositorsâ€™ confidence and encourage savings among the rural active poor.
The target examination becomes necessary following the outcome of the recent routine examination of some of the licensed MFBs by the NDIC and CBN, which revealed that some of the MFBs had begun to harbor serious corporate governance weaknesses and infractions.
These include granting of insider loans and advances without adherence to regulatory standards, outright frauds and forgeries as well as poor risk management practices.
In addition, some MFBs have even closed shop without notifying the supervisory authorities, thereby trapping their depositorsâ€™ funds.
The Corporation has also been inundated with serious complaints and petitions from depositors of some of the microfinance banks over lack of access to their deposits.â€