The Nigeria Deposit Insurance Corporation (NDIC) has begun the final phase of liquidating 89 defunct microfinance and primary mortgage banks, marking a significant step in its effort to tidy up Nigeria’s troubled financial institutions and protect depositors from prolonged uncertainty.
The corporation said the affected institutions had already been resolved under its Purchase and Assumption (P&A) framework, a model that allows healthier financial entities to take over the assets and liabilities of failed banks, reports Daily Independent.
This approach ensured continuity of banking services and safeguarded customer deposits following the revocation of licences by the Central Bank of Nigeria in May 2023.
The closures were part of a broader regulatory crackdown that saw the apex bank withdraw the operating licences of 179 microfinance banks and four primary mortgage banks over persistent regulatory breaches and insolvency concerns. In response, NDIC stepped in as liquidator, working to stabilise the system and minimise losses to depositors.
Under the resolution process, new investors acquired 89 of the failed institutions, receiving fresh licences from the CBN to operate as new entities.
These successor banks have since resumed operations, effectively taking over the customer base and certain obligations of the defunct firms, while helping to maintain confidence in the financial system. With the transition largely completed, NDIC said it is now seeking legal closure.
The corporation plans to approach various divisions of the Federal High Court to obtain orders formally dissolving the defunct banks and discharging it from its role as liquidator, in line with its statutory mandate.
The move signals the final administrative step in a process designed to prevent systemic disruption in Nigeria’s microfinance segment, which plays a critical role in expanding financial inclusion and supporting small businesses.
Analysts say the P&A model adopted by NDIC has increasingly become a preferred resolution tool, as it reduces liquidation delays and preserves value for depositors compared to outright bank closures.
