Tuesday, February 9, 2010 18:40

Ganiyu Ogunleye, managing director of the Nigerian Deposit Insurance Corporation (NDIC) . The financial industry regulator and the Central Bank of Nigeria have been blamed for regulatory lapses, leading to the crisis in the banking sector. Photo: SUNDAY ADEDEJI

Regulator cannot locate microfinance banks

By Stanley Orosaye

The Nigeria Deposit Insurance Corporation is overwhelmed by the number of microfinance banks in the country; a situation which has made the supervision of the subsector difficult, Jacob Afolabi, a deputy director, at the corporation has said.

Mr. Afolabi, who made the disclosure on Thursday in Kaduna, said unlike the regular deposit money banks, the NDIC does not know the location of all the existing microfinance banks, a situation that has made monitoring and supervision difficult.

“Even when we write them letters, some of the mails are returned undelivered. We cannot locate some of these microfinance banks because of their wide spread across the country.”

The officialalso decried the low compliance with regulations by operators in the sector.

According to him, the corporation is supposed to conduct off-sight monitoring on a monthly basis to regulate developments in the sector, but that only 50 per cent of operators comply with regulations that make that possible.

In order to safeguard the interest of depositors, Mr. Afolabi said the corporation is working on a method of identifying functional and non-functional microfinance banks.

The Central Bank of Nigeria, in 2005, released a revised guideline for the operation of microfinance banks in the country. This resulted in the conversion of community banks into micro finance institutions in other for them to play a pivotal role in the poverty alleviation effort of the government.

Since then, close to 800 institutions were registered as microfinance banks across the country.

The current turmoil in the banking industry has taken a toll on the microfinance banks with many of them closing shop and unable to meet their obligations to depositors.

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Reader Comments (8)

Posted by TATA on Oct 30 2009

i have one in my backyard...she does osusu...

Posted by Rt Hon G Dikeocha on Oct 30 2009

The C B N should double its effort in regulating this sector to protect depositors. Again, The three tiers of govts should make deliberate efforts to encourage these very important sector in poverty reduction by directing their agencies like N A P E P,Agric loan agencies etc to pay people through M F Bs operating in localities where people are paid & deposits to be made by these agencies to M F Bs on their operating grants & not the present situations where management of these agencies trade with these funds in commercial banks where they do short term deposits to enrich themselves. These must be done if we want M F Bs to fulfill their obligations on micro credits to Local people !

Posted by Olu Omo1 on Oct 30 2009

Quite embarrassing to hear this. Regulators can't locate institutions they're supposed to regulate? This is funny. In this country again? No wonder they can afford to be reckless with depositors money. NDIC and CBN are a major part of the crisis rocking the financial industry because of these sort of lackadaisical and non-challant attitude. I wonder what will happen to them too for their failures.

Posted by azel on Oct 30 2009

The rate of corruption on every arms of this mano-farm’nigeria’shows that they ve not yet comeup with any policy that will alleviate the suffering of the masses rather,they are aggravating it, I wonder what will happen to them too for their failures.because masses money dey go down the stream , most micro finance have liquidate, e.g GREEN HOUSE MICRO FINANCE,ABEG CBN SHOULD SOMETHING PLEASE.

Posted by azel on Oct 30 2009

Posted by Big Ben on Oct 30 2009

TATA? NA WAO, BUT I FIT BELIEVE YOU WOO.I NO GET TEARS ANY MORE FOR NIJA.

Posted by Ahmed Arabi on Nov 18 2009

Its very disturbing to discover such backwardness in this micro-sector that is suppose to guide, guard, and protect the less privileged who are the engine driving the Economy. I believe a major and workable comprehensive reform is necessary to be carried out by the CBN and NDIC on the inefficient micro-finance institutions . A consolidation of these MFB is going to be welcome idea in order to strengthen them to better serve the masses by putting in place efficient systems which will in turn leave them no choice but to follow the laid down rules and regulations which should be effectively monitored by a department of the CBN.