November 23, 2011
November 23, 2011
The Nigeria Deposit Insurance Corporation (NDIC) has disclosed that no fewer than 103 Micro-Finance Banks (MFBs) were liquidated in the last two years as part of the fulfilment of its mandate of handling distress in the banking system in the country.
The bank has also decided to introduce some basic knowledge on banking for the education of Secondary School students.
This was part of its efforts to ensure sustained enlightenment of the public on banking activities with the distribution of a handbook with the title ‘Basic Knowledge on Banking’ for junior secondary school students, to ensure that they have early good start in financial literacy.
The Managing Director/Chief Executive of the Corporation, Umaru Ibrahim, disclosed this at the closing ceremony of the recent 2011 Oyo State Disabled Sports Competition held at the indoor hall of Obafemi Awolowo Stadium (former Liberty Stadium)
He added that owing to the liquidation of the MFBs, the NDIC paid an aggregate sum of over N2 billion to about 69,000 depositors of the closed MFBs, representing about 41 per cent of total insured amount of about N4.94 billion.
Ibrahim, who was represented by the Director in the Asset Management Department of the Corporation, Adedapo Adeleke, noted that deposit insurance “is a vital component of Nigeria's financial safety-net arrangement and the NDIC is the executing agency; a mandate it has continued to discharge creditably since 1989”.
He disclosed that the corporation faced series of challenges, following the withdrawal of government deposits from merchant and commercial banks to the Central Bank of Nigeria (CBN) barely three months after it commenced operations in 1989, stressing that “so far, the Corporation had been appointed the liquidator of 45 money deposit banks (DMBs)”.
Similarly, he said, “it is on record that as at the end of August 2011, the NDIC had paid a cumulative sum of N3.304 billion out of N5.241 billion insured deposits of 34 DMBs in liquidation and Peak Merchant Bank which were closed before the banking sector consolidation in 2006.
“In addition, the cumulative liquidation dividend paid to the depositors and other claimants of the affected 34 banks in liquidation as at the end of August, 2011 stood at N6.159 billion out of N11.576 billion dividend declared.
“During the same period, a cumulative insured deposit of N3.358 billion had been paid to both private and public sector depositors while N57.396 billion of uninsured deposits i.e. liquidation dividend had been paid to private depositors of 11 DMBs that were closed in 2006”, the NDIC boss disclosed further.
At the presentation of some copies of the handbook to the Oyo State Ministry of Education, the NDIC chief noted that available evidence had showed that an average Nigerian bank customer lacks the requisite knowledge necessary for making important financial and investment decisions.
The NDIC boss said, “as a result of this lack of basic knowledge of financial issues, many bank depositors had suffered some loses by placing their funds in illegal and un-licenced institutions not insured by the corporation”.
He highlighted some of the contents of the handbook to include definition of the bank, types of financial institutions, the reasons why depositors should keep their money in banks, different types of bank account, basic information people need when choosing which banks to open accounts in and basic banking terms.