Customers of Closed Microfinance Banks Received their Deposit.

Customers of closed microfinance received their deposit, the customers started receiving their deposits back in May 2023.

Some of the 132 microfinance banks’ customers who had their operation licenses withdrawn by Nigeria’s Central Bank in May 2023 have received compensation from the Nigerian Deposit Insurance Corporation (NDIC).

Customers of closed microfinance received their deposit

Customers of the impacted bank will get a maximum reimbursement of ₦200,000 upon verification that they held deposits, per two NDIC notices dated May and August 2023.

Because those banks were “inactive, failing to render returns, or not providing the type of services which they were licensed for more than six months, Central Bank canceled their licenses.

The top bank did not give particular explanations for every bank that was impacted. Purple Microfinance Bank and Eyowo Microfinance Bank,

which are supported by the fintech Softcom, are two of the most well-known banks impacted by the CBN move.

According to an NDIC agent who begged not to be identified because he was not authorized to comment on the subject.

“Some of the banks believe the CBN wrongfully revoked their license and have been trying to make a case to regain their license, albeit under a different name.”

Eyowo repeatedly said it is working with the CBN to get its license back and get back into business. It formed a brief alliance with Providus Bank in June 2023, granting certain clients access to their funds.

Following the Providus agreement, at least two users claimed they could originally withdraw their money from Eyowo. However, the app remained unavailable a few weeks later.

A highly-placed Eyowo official stated, “Every microfinance bank impacted by revocation is going through this NDIC process, which is part of CBN/NDIC procedure to either wind down fully revoked banks or reinstate successful applicants like us”.

Larger depositors will have to wait out

Customers with over ₦200,000 balance in their account situation could be more complex- the maximum amount the NDIC will pay, in their account

The affected consumers are being contacted by the banks, who are assuring them that efforts are being made to guarantee that they can access their deposits.

Customers can still turn to the NDIC if the banks are unable to fulfill their commitment.

The insurer backed by the government will evaluate the assets of the banks that lost their licenses and sell what it can. In addition, it will sell any interests the banks may have and retrieve their loans.

The NDIC will reimburse depositors with more than ₦200,000 a “liquidation dividend” in exchange for all or part of their remaining deposits after the firm has been liquidated.

Even while some banks are making applications to regain their licenses, there’s a good chance they won’t be granted

If the bank is unable to persuade the central bank that it is a sound institution. The NDIC may ultimately sell off the bank’s assets to reimburse its depositors.

TechCabal was informed by an NDIC representative, who wished to remain unnamed, that “liquidation is often the last resort.”

“We frequently try various approaches, like asking the shareholders to pour money into the bank, after reviewing the bank’s assets.”

If that doesn’t get a response, the NDIC frequently tries to arrange for another bank to take over the bank or appoint someone else to manage it until conditions have stabilized.