NDIC to Dissolve 89 Defunct Microfinance Banks

The Nigeria Deposit Insurance Corporation (NDIC) has begun the final legal process to wind down 89 defunct Microfinance Banks (MFBs) and Primary Mortgage Banks (PMBs). These institutions were part of a larger group of 183 lenders whose licences were revoked by the Central Bank of Nigeria (CBN) in May 2023. The corporation is now approaching the Federal High Court to obtain formal dissolution orders. This move marks the conclusion of a transition that shifted the assets and liabilities of these failed banks to new owners.

The liquidation follows the successful deployment of the Purchase and Assumption (P&A) framework. Under this arrangement, 89 new eligible institutions were licensed to take over the operations of the defunct banks, ensuring that depositors did not lose access to their funds. By transferring the “good” parts of the failed banks to healthy ones, the NDIC avoided the chaos of a total shutdown. Most of these new entities have already commenced operations under different names.

Transition examples highlight the shift in the retail banking sector. Arise Microfinance Bank in Lagos now operates as Shine Microfinance Bank, while Awka Microfinance Bank in Anambra has become Platinum Microfinance Bank. In Edo, ABC Microfinance Bank has transitioned to Okada Microfinance Bank. These name changes reflect a broader effort to sanitise the financial system and restore public confidence in local lending.

The legal winding down is a mandatory step under the NDIC Act. As the court-appointed liquidator, the corporation must be formally released from its duties once a bank is dissolved. This process effectively wipes the old, failed entities off the national register. The affected banks span several states, with high concentrations in Lagos, Oyo, Kaduna, and the Federal Capital Territory.

The 2023 purge was a major intervention by the CBN to weed out undercapitalised and poorly managed lenders. Many of the 179 MFBs and four PMBs closed at that time were found to be technically insolvent or had ceased operations entirely. By facilitating these mergers and acquisitions, the NDIC has managed to preserve the banking habits of thousands of small-scale savers.

This final legal phase signals the end of a turbulent period for the micro-lending sector. With the court orders pending, the NDIC is shifting its focus toward monitoring the performance of the successor institutions. The corporation maintains that these steps are vital for maintaining the stability of the Nigerian financial system.