Financial experts have urged the Central Bank of Nigeria (CBN) to sustain the vigilance that led to the revocation of the licences of 46 Microfinance Banks (MFBs), saying the move will strengthen confidence in the financial system.
The experts made the call in separate interviews with the News Agency of Nigeria (NAN) on Friday in Abuja.
The President of the Capital Market Academics of Nigeria (CMAN), Prof. Uche Uwaleke, commended the CBN’s action, describing depositor protection as the foremost responsibility of every financial sector regulator.
He said the revocation reinforced market discipline, safeguarded depositors and strengthened confidence in the Nigerian financial system.
According to him, banking is built on trust, and regulators cannot ignore institutions that consistently fail to meet minimum regulatory requirements.
Uwaleke said the affected MFBs failed to comply with key regulatory requirements, including minimum capital standards, financial soundness and operational requirements.
He added that while some had become inactive, others had virtually ceased financial intermediation.
“Doing nothing would expose depositors to greater risks and ultimately undermine confidence in the banking industry.
“Nigeria has well over 1,000 licensed MFBs, so the revocation of the licences of 46 institutions represents only a small proportion of the industry.
“In those circumstances, regulatory intervention is not only justified but necessary,” he said.
Uwaleke said concerns over the safety of depositors’ funds should be allayed by the country’s deposit insurance framework.
According to him, eligible depositors in the affected MFBs are protected by the Nigeria Deposit Insurance Corporation (NDIC).
He explained that eligible depositors would receive up to N2 million as insured deposits, while those with balances above the insured limit would receive the balance through liquidation dividends as the assets of the failed institutions were realised.
“That is why there is no basis for panic. The regulatory framework is designed to protect ordinary depositors even when a bank exits the system.
“Financial regulation is most effective when problems are identified early and corrective action is taken promptly,” he said.
He urged the CBN to strengthen risk-based supervision, enforce prudential standards consistently and continue collaborating with the NDIC to ensure prompt payment of insured deposits whenever banks fail.
Uwaleke also called for sustained public enlightenment on the deposit insurance scheme to reassure depositors that their funds remained protected.
“At the end of the day, this action is not about closing banks for the sake of closing banks; it is about maintaining the integrity of the financial system.
“A sound banking system is one in which only institutions that are financially healthy, well-governed and compliant with regulatory standards are allowed to operate,” he said.
Also speaking, a former President of the Chartered Institute of Bankers of Nigeria (CIBN), Mazi Okechukwu Unegbu, described the CBN’s action as justified.
Unegbu said his findings showed that some of the affected banks were no longer operating, while others had fallen below regulatory standards.
According to him, removing such institutions from the banking system is in the interest of the sector.
He, however, urged the NDIC to take into account the locations of depositors during verification exercises to ensure wider access and proper capture of affected customers. (NAN)