The Nigeria Deposit Insurance Corporation (NDIC) has announced its intention to conduct an inquiry into the directors of 183 banks whose licenses have recently been revoked. This group includes Eyowo, a technology firm that previously operated as a digital bank.
Mr. Bello Hassan, the Managing Director of NDIC, made this declaration during a capacity-building workshop for law enforcement agencies in Lagos. This step demonstrates NDIC’s dedication to addressing financial malpractice and bank fraud while upholding integrity within the banking sector.
By taking this action, NDIC aims to collaborate with the Economic and Financial Crimes Commission (EFCC) and the Nigerian Police to hold those accountable for misconduct that may have contributed to the license revocations. This proactive approach aims to ensure the stability of the banking industry.
Eyowo’s Confrontation with the Central Bank of Nigeria (CBN)
In May, the Central Bank of Nigeria revoked Eyowo’s operating license, along with the licenses of several other digital microfinance banks. After the license revocation, Eyowo informed customers that they would be unable to conduct transactions for a period while they worked to regain their license.
Customers expressed concern over their inability to access funds or complete transactions. Despite this, Eyowo reassured customers, promising to safeguard their funds and apologizing for any inconvenience caused.
Co-CEO Yomi Adedeji later announced that the company would resume financial services using its Payment Solution Service Providers (PSSP) license in early June. Adedeji assured customers that Eyowo was nearly ready to resume operations and would continue offering payment services as one of the CBN-recognized PSSPs.
However, in June, an internal email revealed the company’s shift away from its existing structure. The email stated that Eyowo was winding down Softcom and its previous operations due to lackluster Q1 2023 performance.
The company eventually backtracked, claiming to transition into a financial technology platform focused on “financial connectedness and intelligence.” Despite this, NDIC continued its scrutiny, indicating that the company’s status was “CLOSED,” in alignment with reports of its shutdown.
NDIC’s Investigation Efforts
Mr. Bello Hassan, represented by Mr. Henry Fomah from NDIC’s Legal Department, disclosed ongoing prosecution cases and collaborative efforts during a session involving various agencies.
Hassan noted that recent license revocations prompted NDIC’s involvement in examining directors and officers of the affected MicroFinance Banks (MFBs) and Primary Mortgage Banks (PMBs). The goal is to hold accountable those responsible for these institutions’ collapse.
Mr. Henry added that multiple investigations were underway with various agencies, including the Nigeria Financial Intelligence Unit (NFIU), EFCC, and the Federal Ministry of Justice. The corporation seeks to enhance collaboration among these agencies to effectively address financial malpractices.
NDIC’s Payments to Depositors
NDIC has initiated the process of reimbursing depositors in 179 microfinance banks and four major mortgage banks whose licenses were revoked. Eyowo, categorized as a closed microfinance bank, is included.
Depositors affected by these closures were required to provide alternate bank accounts in commercial banks for their payments. Those without alternate accounts or pending verification were directed to visit NDIC offices for verification and payment. Unverified individuals were also encouraged to download an online verification form from the commission’s website.
As NDIC does not provide insurance coverage for deposits exceeding specific limits, the commission has begun selling the assets of closed banks to settle balances exceeding the insured amounts.
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