Depositors In For Tough Time, As CBN Revokes 224 MFB Licences

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As the legal battle between some micro finance banks, whose operating licenses were  revoked, and the Central Bank of Nigeria, CBN, which revoked the licenses heats up, there  are indications that depositors whose funds are trapped in the affected banks may be in  for real hard times.

Last  month, CBN announced the revocation of the operating licenses of 224 microfinance  banks, giving reasons that include non-performance of loans, loss of loans and managerial  incompetence among others for its action.

The news was greeted with mixed feeling. While some stakeholders were happy with CBN’s  action, saying it will strengthen the banking sector, those whose funds are trapped in  the affected banks were unhappy.

The affected banks have had to deal with an influx of customers who besiege them daily to  demand for their money. Some of them even sleep at the banks’ premises, waiting for their  money.

The CBN has assured customers of the affected banks that they will get half of their  trapped money. In keeping with this promise, the Nigerian Deposit Insurance Corporation  has stepped in to ensure that depositors get their money.

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In a different twist to the matter, the affected banks under the aegis of National  Association of Microfinance Banks comprising of Lagos, Ogun, Ondo, Osun, Oyo, Edo, Ekiti  and Kwara states have dragged the CBN to a Federal High Court in Lagos, seeking to  reverse the revocation.

The banks claimed that the action of CBN was biased as they were not given adequate time  to either seek the option of a merger or beef up their capital base before the  revocation.

In what appears to be a foreclosure of any kind of review or reversal of its decision,  the CBN has said that it will not go back on its earlier decision.

Knowing the slow pace at which the wheel of justice turns in Nigeria, depositors may not  be able to get their promised maximum N100,000 compensation by NDIC.

Consumers’ Advocate hopes that both parties will be reasonable in their positions so that  the poor depositors whose funds are trapped can get their money back early enough.