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Depositors
of the 103 failed Micro Finance Banks (MFBs) whose licences were
revoked by the Federal Government are to be paid about N9.8 billion by
the Nigeria Deposit Insurance Corporation (NDIC).

Beneficiaries
numbering 731,000 in 91 out of total affected MFBs nationwide are to
receive their monies following the completion of the verification and
authentication of their documents by the corporation, which took over
the banks for liquidation in the wake of the revocation of the
operational licences of 224 “terminally distressed and technically
insolvent” MFBs last year by the Central Bank of Nigeria (CBN).

The
corporation is charged with the statutory responsibility of providing
insurance cover for all money deposit financial institutions in the
country. The affected institutions were those with negative
shareholders’ funds, negative capital adequacy ratios, and negative
liquidity ratios.

Head
of the corporation’s communication and public affairs department, Haji
Birchi, yesterday, said while the NDIC is statutorily mandated to pay
N4.9 billion insured deposits to the affected depositors, the balance
of N4.9 billion uninsured deposits would be disbursed to them on
realisation of physical assets and recovery of debts owed to the failed
MFBs.

Since
the commencement of payment exercise on December 6 last year, the
corporation has already paid N1.492 billion to about 45,000 depositors
of the 91 closed MFBs out of the N4.9 billion of insured deposits due
for payment, Mr Birchi said.

Second round payment

During
the second round payment expected to commence on Tuesday, May 3, 2011,
the NDIC spokesman said about N2.177 billion would be disbursed to the
remaining 393,000 depositors of Integrated Microfinance Bank (IMFBs).

The
corporation had disbursed about N529 million to 21,000 depositors of
the IMFB between January 31 and February 4, 2011 as insured sums of the
affected institutions.

According
to Mr Birchi, depositors in the 11 remaining MFBs are scheduled to be
paid as soon as their records are made available to the corporation.

They
include Bristol MFB, Mustason MFB, Newgate MFB, Primate MFB, and South
West MFB in Lagos State; as well as Embrace MFB and Homeland MFB in
Yenagoa, Bayelsa State; while the rest include Cubic MFB in Benin City,
Edo State; Galaxy MFB in Warri, Delta State; Gamji MFB in Birnin Kebbi,
Kebbi State; and Standex MFB in Onitsha, Anambra State.

Under
the deposit insurance system, depositors in money deposit financial
institution are supposed to be protected as well as given guarantee
through the settlement of insured funds when their banks can no longer
repay their deposits. The maximum insured balance payable to
microfinance depositors in line with the 2005 microfinance policy
issued by the CBN is N100, 000 only.

The
2005 policy, which created a platform for the establishment of
microfinance banks, also established a framework for the CBN’s
supervision of MFBs.

Though
proprietors seized the instrumentation of the new policy to float over
800 microfinance institutions across the country, the apex bank was to
discover during the recent reform programme initiated by the Sanusi
Lamido Sanusi management that most of the banks derailed from the
objectives they were set to achieve, resulting in the revocation of
operational licences of 224 of them.

Following
investigation of the activities and records of the 103 MFBs, most of
them were found to have been run aground by their directors and
officials who engaged in insider-related abuses such as outright
stealing, granting of unauthorised credits, and diversion of
depositors’ funds.