The Nigeria Deposit Insurance Corporation (NDIC), a quasi-independent agency of the federal government that insures deposit-taking financial institutions, recently announced that it will grant an undisclosed amount of financial assistance to distressed microfinance banks (MFBs) and primary mortgage banks (PMBs) recently closed by the Central Bank of Nigeria (CBN). NDIC, CBN and the country’s Ministry of Finance are developing a bailout framework that places “strict” conditions on select MFBs and PMBs that meet undisclosed criteria in an effort to revive mortgage financing. Stipulations will be in the areas of CBN’s revised supervisory guidelines for primary mortgage banks, refinancing schemes in the mortgage sector and the proposed review of the land use act. Once the NDIC Board approves the framework, further details are slated to be disclosed.
Seven of 25 undisclosed PMBs closed by CBN have been liquidated with payments disbursed as compensation to their depositors. The number of closed MFIs is unavailable.
By Jennifer Young, Research Associate
About Nigeria Deposit Insurance Corporation (NDIC)
The Nigeria Deposit Insurance Corporation (NDIC) is a quasi-independent agency of the federal government of Nigeria. Its purpose is to protect depositors and guarantee the settlement of insured funds when a deposit-taking financial institution can no longer repay its deposits, thereby helping to maintain the stability of the financial
About Central Bank of Nigeria (CBN)
The Central Bank of Nigeria (CBN) was established in 1958 as Nigeria’s central banking authority. As defined by the act of parliament that created CBN, its statutory mandates are as follows: “to issue legal tender currency; to maintain external reserves; to safeguard the international value of the legal tender currency; to promote monetary stability and a sound financial system in Nigeria; and to act as banker and financial adviser to the Federal Government.” As of November 2012, CBN reports total assets of NGN 13.3 trillion (USD 82.4 billion).
Sources and Additional Resources
Vanguard Nigeria Story: “NDIC Plans Bailout for Microfinance, Mortgage Banks”
http://www.vanguardngr.com/2013/04/ndic-plans-bailout-for-micro-finance-mortgage-banks/
MicroCapital Story: “MICROCAPITAL BRIEF: Central Bank of Nigeria: Microfinance Bank Assets Increase 3% to $1.3b Over 6 Months, Reserves Dip Into Negative Territory,” December 10, 2012.
MicroCapital Story: “MICROCAPITAL BRIEF: Estimate: 90% of Nigerian Microfinance Clients Commit Fraud to Obtain Loans,” December 4, 2012.
https://www.microcapital.org/microcapital-brief-estimate-90-of-nigerian-microfinance-clients-commit-fraud-to-obtain-loans/
MicroCapital Story: “MICROCAPITAL BRIEF: Nigerian Deposit Insurance Corporation (NDIC) Launches Investigation into Managers, Directors of Distressed Microfinance Banks,” April 7, 2012.
https://www.microcapital.org/microcapital-brief-nigerian-deposit-insurance-corporation-ndic-launches-investigation-into-managers-directors-of-distressed-microfinance-banks/
MicroCapital Story: “MICROCAPITAL BRIEF: Nigerian Deposit Insurance Corporation (NDIC) Disburses $12.6m to Depositors of Closed Nigerian Microfinance Banks,” April 3, 2012
https://www.microcapital.org/microcapital-brief-nigerian-deposit-insurance-corporation-ndic-disburses-12-6m-to-depositors-of-closed-nigerian-microfinance-banks/
MicroCapital Story: “MICROCAPITAL BRIEF: Microfinance Banks Want In On Central Bank Of Nigeria’s Proposed Bailout Of Commercial Banks,” December 4, 2009.
https://www.microcapital.org/microcapital-brief-microfinance-banks-want-in-on-central-bank-of-nigerias-proposed-bailout-of-commercial-banks/
MicroCapital Universe Profile: Central Bank of Nigeria
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Central+Bank+of+Nigeria+%28CBN%29
MicroCapital Universe Profile: Nigeria Deposit Insurance Corporation (NDIC)
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Nigeria+Deposit+Insurance+Corporation+%28NDIC%29
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