The Senate Committee on Banking, Insurance and Other Financial Institutions says it is concerned over the new minimum capital requirement prescribed for various categories of microfinance banks in the country by the Central Bank of Nigeria (CBN).
Speaking during an oversight visit to the Nigeria Deposit Insurance Corporation (NDIC) in Abuja, Chairman of the committee, Dr. Rafiu Adebayo Ibrahim, warned that the hike will be inimical to the objectives of the financial inclusion strategy.
The financial inclusion strategy aims to bring 80 percent of Nigeria’s adult population into the formal financial system by the year 2020, which is barely two years away.
According to the new capital requirements recently released by the apex bank, unit MFBs had their capital base raised from N20 million to N200 million; and N100 million to NI billion, and N2 billion to N5 billion for unit, state, and national MFBs respectively.
A statement by Muhammed Kudu Ibrahim, spokesman for the corporation, said the Senate Committee expressed a strong commitment to accelerating amendment of the Nigeria Deposit Insurance Corporation (NDIC) Act, 2006. This is expected to eliminate existing gaps that have hindered the full realization of the public policy objectives of the implementation of the Deposit Insurance System (DIS) in Nigeria.
Senator Ibrahim was reacting to a statement by Managing Director/Chief Executive of the NDIC, Umaru Ibrahim, who noted that unless the Act is amended speedily, the corporation is “handicapped in acting to end the plight of depositors… of Savannah Bank” for example.
Specifically, the NDIC boss noted that the NDIC Act, as presently enacted, restrains the corporation from reimbursing depositors of banks whose licences are yet to be revoked due to protracted litigation.
The NDIC boss thereafter made appealed to the Committee to amend the NDIC Act, even as he updated them on the corporation’s response to the revocation of 153 MFB operating licences and six Primary Mortgage Banks (PMBs), by the CBN.
Already, he continued, the corporation has commenced payment of depositors of 25 of the MFBs and deposits verification of 50 others.
Challenges encountered by MFBs in the country, he noted, included the rising incidences of non-performing loans, insider credit abuse, non-compliance with extant regulations on their establishment and the overbearing indulgence in other fringe operations, along with poor earnings.
He further used the opportunity to inform the Committee of the strong resolve and commitment of the corporation to assist in the investigation and prosecution of all those who contributed to the collapse of the defunct Skye Bank.
The committee chairman commended the NDIC for the excellent quality of its reports on the supervision of banks which have become the benchmark in the industry.
The committee pledged mutual cooperation to confront emerging issues in the financial services industry such as Block-chain Technology, Financial Inclusion, Cyber Crime, Digital Banking, Consumer Protection and the provision of credits to MSMEs.