All the 978 Microfinance Banks operating in Nigeria were able to grant total loans and advances amounting to N195 billion as at December, 2016, to boost Micro Small Medium Enterprises (MSMEs) across the country.
Disclosing this, while defending the corporation’s proposed 2017 budget before the House Committee on Insurance and Actuarial Matters, the managing director/CE of Nigeria Deposit Insurance Corporation (NDIC), Alhaji Umaru Ibrahim, said the total deposits liabilities of microfinance sub sector is now N158 billion.
Of the N195 billion loans granted, he said, N87.75 billion or 45percent were Non Performing Loans (NPLs) where N68.25 billion or 35% constituted Insider related/Directors loans. The NPLs, according to him, indicated a classic case of over-lending, accumulated interests charges and poor corporate governance.
Similarly, by extension, he stated that the existing 42 primary mortgage banks (PMBs) had total deposit liabilities of N69 billion but with total loans portfolio of N94 billion, which indicated another case of over-lending, accumulated interests, poor corporate governance and high ratio of NPLs which stood at N51.7 billion or 55% out of which N42.3 billion or 45% were Insider related/Directors loans. The resultant effects of these negative trend, he said, would be poor earnings and erosion of shareholders fund.
The NDIC boss observed that this development had posed serious issues bordering on corporate governance which were capable of eroding public confidence in the banking system. He, however, advocated for strict compliance with the existing code of ethics for bank directors and a review of the existing laws and regulations to proffer stiffer sanctions for Directors who exploit their positions and default in the payment of their credit facilities while still occupying directorship positions in the banks.
Speaking in response to the proposed NDIC budget, the Chairman of the Committee, Hon. Femi Fakeye, commended the corporation on its performance in the 2016 budget where the NDIC stood out amongst its peers especially its transfer of huge sums into Consolidated Revenue Fund (CRF).
While reacting to the 2008/2009 banking crisis, Fakeye called on the corporation and other regulatory authorities to come with ideas and advise the Honourable members on the ways of salvaging the financial situation.