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NDIC to prosecute MDs of failed microfinance banks

By Emma Ujah
ABUJA — The Nigeria Deposit Insurance Corporation , NDIC, has commenced the compilation of the list of Managing Directors and top management staff of the failed microfinance banks whose licences were recently withdrawn by the Central Bank of Nigeria, CBN, with a view to prosecuting them

The licences of 224 microfinance banks were recently withdrawn by the CBN in a bid to sanitise the system.
According to the apex bank, the licences were withdrawn for failure to strictly adhere to regulatory standards for the operation, especially with regard to corporate governance ethics and liquidity issues.

After a careful examination of the system, however, it issued provisional operating licences to 142 of the affected banks in what was considered a second chance to enable the owners firm up their institutions and remain in business.
NDIC’s Director of Research, Policy and International Relations Department, Dr. Ade Afolabi, disclosed in Bauchi, weekend,  that those who crashed the microfinance banks would not be allowed to go scot-free.

According to him, the regulatory authorities were closely monitoring the microfinance banks with a view to making them veritable tools for financial inclusion in the nation where the larger percentage of the populace had no banking culture.

Delivering a paper entitled: “The Role of Microfinance Banks in Financial Inclusion,” at the just concluded workshop for Business Editors and Finance Correspondents, Afolabi urged the Microfinance Banks Association to be more effective in self-regulation in order to strengthen the sub-sector.

He said the decision for prompt payment of insured deposit to customers of the failed microfinance banks was to shore-up confidence in that arm of the banking industry.

The regulators, Afolabi said, were considering the possibility of categorizing the banks into rural and urban with a view to providing incentives for investors to establish more of the microfinance banks in rural areas and to avoid the current over concentration in the urban centres, which somewhat defeats the major objectives of the scheme.


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