The Nigerian Deposit Insurance Corporation (NDIC) has started compensating customers of 132 microfinance banks whose licenses were revoked by the Central Bank of Nigeria (CBN) in May 2023. Customers are eligible for a maximum payout of ₦200,000 upon proving their deposits, as per NDIC notices issued in May and August 2023.
The CBN revoked the licenses of these banks for reasons including inactivity, insolvency, failure to provide mandated banking services, and non-compliance with reporting requirements. Among the affected banks were prominent names such as Eyowo Microfinance Bank, backed by fintech Softcom, and Purple Microfinance Bank.
Eyowo has been engaging with the CBN to regain its license, asserting its readiness to resume operations. In June 2023, the bank partnered briefly with Providus Bank to enable customers to access their funds, but the arrangement was short-lived as the app became inaccessible shortly after.
For depositors with balances exceeding ₦200,000, the NDIC has outlined a process to recover additional funds. This includes liquidating the assets of the closed banks, recovering loans, and selling investments. These funds will then be distributed as a “liquidation dividend” to customers whose deposits exceed the compensation limit.
Efforts to resolve the situation include asking shareholders to inject capital into the affected banks or negotiating takeovers by other institutions. However, if these measures fail, the NDIC will liquidate the banks’ assets as a last resort to reimburse depositors.
While some banks are attempting to regain their licenses, there remains a significant risk they may not succeed. For customers, this means continued uncertainty, especially for those with larger deposits.
