203 micro finance banks fail returns’ rendition rule

bank-greeneuropeanjournalTHE Nigeria Deposit Insurance Corporation (NDIC) said that only 679 Microfinance Banks (MFBs), out of the 882 in operation in 2014, representing 77 per cent, rendered returns to it, with 203 others (23 per cent), failing the rendition rule.

Meanwhile, the Deposit Insurance Fund (DIF) recorded a 20.8 per cent increase to ₦614.2 billion in 2014 representing ₦106.1 billion increase from ₦508.1 billion in 2013.
DIF, also known as cumulative premium by insured institutions, is a pool of fund set aside to pay back money or deposits lost due to failure of financial institution and mobilised by insurance payments by banks.

The disclosure was contained in the PricewaterhouseCoopers audited yearly report and statement of account of the NDIC for 2014.

The inability to obey rules may not be far from the corporate governance challenges so far assessed to be bedeviling the sub-sector, alongside weak capital base, poor asset quality, lack of microfinance banking knowledge and experience, high operating costs, scarcity of loanable funds, low literacy level and inadequate Management Information System.
The majority of the MFBs, according to NDIC report, had remained concentrated in the South-West, with 313, representing 35.49 per cent in operation, followed by the South-East and North-Central with 166 (18.82 per cent) and 160 (18.14 per cent) respectively.
The North-West had 104 (11.79 per cent) MFBs, while the South-South and North-East had the least number of MFBs with 101 (11.45 per cent) and 38 (4.31 per cent) each.
The sub-sector’s total assets grew by 12.26 per cent from ₦197.44 billion in 2013 to ₦221.65 billion in 2014, while total loans and advances moved from ₦85.44 billion in 2013, to ₦114.70 billion in 2014. 
The NDIC report also showed a 3.01 per cent growth in insurance coverage to the total number of depositors of deposit money banks between 2013 and 2014, while the number of depositors fully covered in 23 banks increased by 3.05 per cent from 60.6 million in 2011 to 62.5 million in 2014.
NDIC, in calculating the applicable premium, said it used 40 basis points as the premium base rate before the add-ons for banks under the Differential Premium Assessment System (DPAS) and a flat rate of 50 basis points to compute the premium payable by PMBs and MFBs in 2014.

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