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NDIC Reduces Insurance Premium for Banks

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The Nigeria Deposit Insurance Corporation (NDIC) yesterday said it had approved the reduction of insurance premium paid by Deposit Money Banks from 0.5 per cent to 0.35 per cent.

The new premium-based insurance rate of 0.35 per cent, according to the corporation, is expected to take effect from next year.

Umar Ibrahim, Managing Director/Chief Executive, NDIC, disclosed these at the 25th anniversary press conference held at the corporation’s headquarters in Abuja.

The decision to reduce the insurance premium, he said, was part of the corporation’s contribution not only to failure resolution, but to the Financial Stability Fund.

This, he added, would help the corporation reduce cost of funds incurred by deposit money banks, thus ensuring stability of the banking sector.

He said, “Another contribution to failure resolution by the NDIC is in its contribution to the Financial Stability Fund by the downward review of premium payable by banks through a reduction of the assessment rate from 50 to 40 and further to 35 basis points.

“That was done to encourage banks in their contribution to the Financial Stability Fund and reduce the cost of funds by deposit money banks.”

Shedding more light on the development,, Zaccheaus Anate, director, Insurance and Surveillance Department, NDIC said the 0.35 per cent reduction on insurance premium would commence from next year.

He said when the premium was first reduced in 2010 from 0.5 per cent to 0.4 per cent, the corporation was able to reduce the amount of insurance premium paid by banks by N53bn.

He said, “In support of the financial stability fund, in 2010, we reduced the premium based rate from 0.5 per cent to 0.4 per cent and that took effect from 2011 up to this year and that is for four years and for this four year period, we have had a reduction of N53bn as a result of reduction in the base rate from 0.5 to 0.4.

“Now, from next year, there is going to be an additional reduction in the base rate from this 0.4 per cent to 0.35 per cent from next year and definitely that will lead to additional reduction for banks.

“We want to make sure that we reduce premium burden for banks and also to make sure that the deposit insurance is fairly priced. We want to support the banks to make sure they succeed.”

Giving a performance of the corporation in the last 25 years in the area of distress resolution, the NDIC MD said that as at the end of August, it had paid a cumulative sum of N93.64bn as liquidation dividend to 250,497 depositors

He also noted that the NDIC had declared a final dividend of 100 per cent of total deposits in respect to 14 closed banks as at December 2013.

This, according to him, is an indication that all depositors in those banks had fully recovered their deposits.

Furthermore, Ibrahim stated that the sum of N1.72bn was declared as dividends to 699 creditors of the nine banks.

Out of that amount, the corporation, he explained, had paid the sum of N1.19bn to 424 creditors who filed their claims as at August 31, 2014.

Similarly, he added that the corporation had paid liquidation dividend to 453 shareholders of Alpha, Pan African and Nigeria Merchant Bank, which stood at N2.03bn as at August 31, 2014.

With regards to liquidation activities, he stated that the corporation had made a lot of achievements in ensuring that depositors of liquidated banks suffer as little loss as possible.

He said. “Following the revocation of the operating licenses of insured DMBs in 1994, 1995, 1998, 2000, 2003 and 2006, as well as the 103 MFBs in 2010, 83 in 2013 and 26 PMBs, the NDIC ensured the prompt payment of insured sums and dividends to uninsured depositors and other eligible claimants.

“A cumulative amount of N6.82bn was paid to 528,277 insured depositors of the 48 DMBs in-liquidation as at August 31, 2014.

“While for the 186 closed MFBs, the cumulative amount of N2.75bn had been paid to 80,059 verified depositors as at 31st August, 2014.”

Despite these achievements, the MD, however lamented that the corporation is still being faced with a lot of challenges.

Some of them are its inability to locate some of the closed Primary Mortgage Banks whose licenses were revoked by CBN; litigations by former shareholders of closed banks and creditors of the closed banks.

Others are unsatisfactory rendition of returns by some MFBs; and delays in the legal and judicial process in relation to failed banks cases.

For instance, he said till date, Peak Merchant Bank one of the 36 banks closed between 1994 and 2003 is still contesting the withdrawal of its license in court while Savannah Bank is yet to resume operation after court had passed judgment in its favour.

This, he lamented had made it difficult for innocent depositors of the two banks to have access to their trapped funds.

He also said awareness about the corporation’s activities remains low despite all the efforts to improve it, noting that a recent survey on public awareness commissioned by the corporation, indicated that the level of awareness was about 40 per cent.

Despite the challenges facing the corporation, the NDIC boss said the board, management and staff are determined to ensure that it achieves its broad mandate of protecting depositors and providing a stable financial system in Nigeria.


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E-Financial

Lagos State Appoints MoneyMaster as Payment Partner for “Ounje Eko” Programme

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“Ounje Eko”, the food price discount initiative of the Lagos State Government, has appointed leading payment service bank, MoneyMaster Payment Service Bank Limited (MMPSB), as its collaborator in the bid to ensure ease of payments at the market.

MoneyMaster is one of the Central Bank of Nigeria-licensed Payment Service Banks (PSBs) to promote financial inclusion across Nigeria.

Under the partnership, MMPSB will apply its cutting-edge payment solution to engender easy payment and reconciliation in order to make   the experiences of Lagosians who will be getting their food supplies from the markets pleasurable. Its payment solution is also all-encompassing and ensures real time value to payment destinations.

The mobile bank was appointed as the collection and payment partner for “Ounje Eko” Food Markets programme which is a government initiative serving the five divisions of Lagos State. Consequent on this, MoneyMaster Payment Service Bank will collect payments in 57 LCDAs in the state.

The partnership gives credence to the quality of payment solutions that MoneyMaster is reputed for in its services to its growing business clientele in private and public sectors.

 


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E-Financial

CBN, EFCC Probe Banks, Firms over Alleged Forex Racketeering

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Central Bank of Nigeria (CBN), is investigating irregular foreign exchange transactions and forward contracts valued at approximately $2.4 billion.

CBN, EFCC Probe Banks, Firms over Alleged Forex Racketeering

The  inquiry follows an extensive audit by Deloitte, which scrutinized $7 billion in dollar debts accumulated under the bank’s previous leadership.

In the aftermath of the 294th Monetary Policy Committee meeting in Abuja, Yemi Cardoso, governor of CBN,  disclosed to journalists that the investigation, supported by the Economic and Financial Crimes Commission, among other security bodies, aims to clarify the legitimacy of these FX allocations identified as problematic by the audit.

“It was determined that a number of these transactions did not qualify…they were outright illegal. The law enforcement agencies are now looking into those transactions that as far as we are concerned, are not valid to be paid,” Cardoso detailed, emphasizing the unlawful nature of these forex deals.

The crux of the investigation lies in the audit findings that a significant portion of the scrutinized transactions lacked proper documentation and, in many instances, were deemed outright illegal.

However, the unfolding investigation has raised concerns within the organized private sector, with some entities contemplating legal action against commercial banks for unresolved forex bids.

Despite these tensions, Governor Cardoso reassures that the foreign exchange market remains open and transparent, inviting stakeholders to address their forex needs through the official channels.

Furthermore, Cardoso clarified the distribution of fertilizers to farmers as a one-off measure and not indicative of a shift back to direct interventions by the CBN, underscoring a commitment to strategic, regulatory governance rather than direct market involvement.

 

 

 

 

 

 

 

 


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CBN Urges Banks to Expedite Action on Recapitalisation

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Central Bank of Nigeria (CBN) has directed deposit money banks in the country to expedite action to increase their capital base from the current ₦25bn.

CBN Urges Banks to Expedite Action on Recapitalisation

Olayemi Cardoso, governor of CBN

Olayemi Cardoso, governor of CBN, stated this during the apex bank’s 294th meeting of the Monetary Policy Committee (MPC) on Tuesday in Abuja, when the MPC hiked the interest rate by 22.75% to 24.75%.

The apex bank chief said the MPC examined developments in the banking sector and expressed satisfaction that the industry remained stable. The committee, however, said to guard against risk, commercial banks in the country should accelerate their recapitalisation efforts.

Cardoso said, “The MPC also reviewed developments in the banking system and noted that the industry remains safe, sound, and stable. The committee thus called on the bank to sustain its surveillance and ensure compliance of banks with existing regulatory and macro-potential guidelines.

“The MPC also enjoined the banks to expedite actions on the recapitalisation of banks to strengthen the system against potential risks in an increasingly globalised world.”

 

 

 

 


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