5th October, 2010
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.
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.