THE central Bank of Nigeria, CBN, has approved the liquidation of 83 existing microfinance banks over engaging in fraudulent activities and non operational offices.

Already, a total of N102 billion has been earmarked in the 2014 budget of the Nigeria Deposit Insurance Corporation, NDIC, for payment to depositors of the affected banks.

Managing Director of the Nigeria Deposit Insurance Corporation, NDIC, Alhaji Umaru Ibrahim, who disclosed this Tuesday, when he appeared to defend his agency’s 2014 budget before the Senator Bassey Otu-led Senate Committee on Banking and Currency, said the banks were among the 900 microfinance banks with operational licenses in the country.

He insisted that the sledge hammer fell on the banks due to discovery that they were not only existing on papers but used to defraud unsuspected Nigerians.

Ibrahim said that the NDIC was already working towards determining the number of depositors and how much each deposited in the banks in order to pay them.

“Some assets of the banks will also be sold. There is no doubt that the operations of some of the microfinance banks have become epileptic.

“Funding gap is what we do to prepare for the rainy day. We hope and pray that the rainy day does not come but any insurance should prepare for the rainy day. As we speak, no bank benefited from the fund in 2013.”he said.

The NDIC boss fumed over what he called “the dollarisation’ of the economy by speculators” but assured members of the public that the issue was already being looked into by the CBN to ensure that it does not affect the economy.

He also told the committee that NDIC initiated rebranding operations to ensure better service, saying after operating for 20 years, the NDIC had decided that it was time to rebrand for total reorientation.

“In 2013, we maintained confidence and stability of the banking system through a continuous effective supervision and regulation of the system. We have also try to pay depositors of institutions that had been liquidated.

“We have stepped up awareness and campaigns about our activities to make sure that members of the public put up claims of their locked up deposits in liquidated financial institutions. We appointed some banks as agents with the assistance of our various zonal offices that we had established in various parts of the country.

“Our plans for this year is to continue to protect depositors funds and to enhance the supervision. To promote financial literacy, consumer protection so as to make sure we enhance financial inclusion so that millions of Nigerians that do not have access to banks for any form of financial system or outlet are assisted in various ways.

“For instance, we are partnering with the Central Bank of Nigeria to discuss the ways and means of ensuring depositors of mobile banks and depositors of mobile phone system.

“Mobile banks are emerging and seven banks had been licensed by the CBN to get involved in mobile banking and there are 11 non banking telecommunications related institutions that had been licensed to offer mobile money service.

“This need to be regulated. The depositors of the institutions offering mobile banking needed to be identified and protected. The whole essence of this is that if we have millions of such people sending and collecting money through mobile banking system.

“We want to ensure that in event of any crisis, they are covered. Unless they have that assurance of being covered, you don’t expect them to accept to participate in this revolutionary project that is coming on board.

“We are trying to educate members of the National Assembly and also engage with our bosses like the Minister of Finance to make them appreciate that generally speaking, the world over, deposit insurance agencies are exempted from certain provisions so that they can generate their refunds and grow their refunds so that in the event of any problem, those agencies should be able to meet their obligations. It is a matter of engagement and dialogue and promotion of understanding.

“There is a provision in our law that if the depositors funds reached certain level we will pay taxes, dividends,”, he said.

Ibrahim added: “On the issue of a repeal of the Fiscal Responsibility Act, it is not a bad idea to take a second look at it. We will welcome a review of the act” He also hinted on plans to regulate mobile banking in the country to avoid any form of fraudulent practice by operators either in the banking or telecommunications sector.”