NDIC moves to dissolve 90 defunct banks after resolution

From Adanna Nnamani, Abuja

The Nigeria Deposit Insurance Corporation (NDIC) has commenced the final phase of winding down 89 defunct Microfinance Banks (MFBs) and one Primary Mortgage Bank (PMB), following their successful resolution under the Purchase and Assumption (P&A) model.

In a statement issued on Wednesday, the Corporation disclosed that the affected institutions have already been taken over by new investors, recapitalised, and are now operating under new identities. This marks a transition from failure to recovery within the banking system.

The move comes nearly two years after the Central Bank of Nigeria (CBN) revoked the licences of 179 microfinance banks and four mortgage banks in May 2023, as part of efforts to sanitise the financial sector and strengthen regulatory oversight.

The NDIC explained that the ongoing process is designed to legally conclude the liquidation of the resolved banks while ensuring financial system stability and depositor protection.

According to the Corporation, assets and liabilities of the failed institutions were transferred to stronger investors under the P&A framework, allowing business continuity and safeguarding customer deposits.

“As Liquidator, the Corporation will be presenting applications to various divisions of the Federal High Court to obtain orders of dissolution for the closed banks and to be discharged from its role,” NDIC stated.

The Corporation added that the majority of the affected institutions are microfinance banks, which traditionally serve low-income earners, small businesses, and participants in the informal sector. It noted that the resolution strategy minimised disruption, preserved jobs, and maintained public confidence in the financial system.

NDIC further noted that many of the successor institutions have adopted modern, fintech-driven models, indicating a shift towards digital banking and improved service delivery. It said that a significant number of the affected banks were concentrated in Lagos, with others spread across various regions of the country.

The Corporation reaffirmed its commitment to protecting depositors and ensuring the orderly resolution of failed institutions, stressing that the final dissolution process represents the last stage of its intervention. It added that the move reinforces confidence in the system by demonstrating that bank failures can be managed without triggering wider financial instability.