NDIC begins final dissolution process for 89 failed banks

Stanley Ihedigbo

Nigeria Deposit Insurance Corporation (NDIC) has commenced the final phase of winding down the operations of 89 failed Microfinance Banks (MFBs) and Primary Mortgage Banks (PMBs), marking a significant step in the ongoing clean-up of Nigeria’s financial sector.

The Corporation disclosed that the affected financial institutions had already been successfully resolved through the Purchase and Assumption (P&A) model, which enabled new investors to acquire their assets and liabilities while ensuring continuity of banking services to customers.

According to the Head, Communication & Public Affairs, Hawwau Gambo, the 89 banks form part of the larger pool of 179 microfinance banks and four primary mortgage banks whose operating licences were revoked by the Central Bank of Nigeria (CBN) in May 2023 as part of regulatory efforts to strengthen the stability of the financial system.

Following the revocation, the NDIC facilitated the transition process by granting licences to 89 new institutions deemed capable of taking over the defunct banks.

These new entities have since commenced operations under different names, effectively preserving depositors’ funds and maintaining financial inclusion across affected communities.

To formally bring the liquidation process to a close, the NDIC, acting in its statutory role as liquidator, has begun filing applications at various divisions of the Federal High Court.

The objective is to obtain court orders that will dissolve the defunct institutions and discharge the Corporation from its responsibilities as liquidator.

The move is in line with the provisions of the NDIC Act and other applicable legal frameworks governing bank resolution and liquidation in Nigeria.

Industry analysts view the development as a crucial milestone in reinforcing confidence in the banking system, particularly within the microfinance and mortgage banking segments, which play a vital role in supporting small businesses and expanding access to financial services.

By concluding the liquidation process, the NDIC is expected to further streamline the financial ecosystem, eliminate legacy liabilities, and pave the way for a more resilient and efficient banking sector.

The Corporation reiterated its commitment to safeguarding depositors’ interests while ensuring that failed institutions are resolved in an orderly and transparent manner.