Thursday, 22 March 2018

Beware of wonder banks that give extra-ordinary interest rates - NDIC tells Nigerians

By iAm March 22, 2018 Leave a Comment

The Nigeria Deposit Insurance Corporation (NDIC) has urged Nigerians to be wary of “wonder banks” that give extra-ordinary interest rates and profits on investments. Its managing director, Umaru Ibrahim, gave the advice in an address at the NDIC special day at the ongoing 29th Enugu international trade fair in Enugu on Thursday, March 22, The News Agency of Nigeria (NAN) reports. Umaru, who was represented by NDIC director of strategy development, Festus Ekechi, said many Nigerians had continued to lose fortunes and even their life savings to Ponzi schemes and other illegal fund managers with disastrous consequences.

“The corporation’s activities, through the supervision of banks, continuous monitoring and oversight, serves as consumer protection for depositors (in legal banks) which enhances confidence in the financial system. "This acts as an incentive for the unbanked to access financial services of licensed banks. “Poor and uninformed depositors need assurance that the services of licensed deposit taking institutions are safe and that they have access to their money whenever they need it,” he said. The NDIC managing director said the NDIC was determined to ensure the safety and soundness of the nation’s financial system. According to him, the key mandate of the corporation is to provide deposit guarantee to depositors of insured financial institutions, banks supervision, distress resolution, and bank liquidation.

He said that since inception, NDIC had grown from strength-to-strength in ensuring that the over-riding public policy objectives for establishing a deposit insurance system in the country were realized. “With the protection of depositors in mind, the Maximum Deposit Insurance Coverage (MDIC) per depositor per bank progressively increased from N50, 000 in 1989 to its current N500, 000 per depositor per Deposit Money Banks (DMBs). “Similarly, the insured limit for Micro-Finance Banks (MFBs) and Primary Mortgage Banks (PMBs) in 2009 was increased from N100, 000 to N200, 000 per depositor per MFB/PMB in 2010.

“However, on August 4, 2016, the Minister of Finance approved an upward review of the deposit insured limit for depositors of PMBs to N500, 000 in order to ensure coverage of over 90 per cent of depositors in the banking sub-sector.
“It is pertinent to point out that depositors who have funds in excess of the insured limit are entitled to liquidation dividend after recovery of debts and sales of physical assets of the closed banks,” he said.

Meanwhile, operatives of the Economic and Financial Crimes Commission (EFCC) have arrested 27 suspected operators of illegal financial institutions, also known as wonder banks. Premium Times reports that the head of media, Ibadan zonal office of the agency, Femi Oyewole, who disclosed this on Thursday, February 22, said the suspects were arrested at different locations within Ibadan, Oyo state capital. The suspects include, Olayeni Oladokun Samuel, managing director of Unlimited Grace Investment limited and ten members of his staff, Chris Igbinake of Grooming Centre and four of his staff and Akanbi Oluwakemi of Grace & Mercy Households Improvement Initiative and four of her staff.