The Nigeria Deposit Insurance Corporation has formally taken over the liquidation of 46 microfinance banks following the revocation of their operating licences by the Central Bank of Nigeria on Wednesday.

The NDIC was appointed as the official liquidator under Section 12(2) of the Banks and Other Financial Institutions Act 2020 and Sections 55(1) and 55(2) of the NDIC Act 2023.

The mass licence revocations have sparked concern among depositors, prompting the corporation to clarify the implications for customers and the broader microfinance sector.

In response to the regulatory action, the Head of the NDIC’s Communication and Public Affairs Department, Hawwau Gambo, issued a public notice outlining the corporation’s position on the assets of the defunct microfinance banks.

“Members of the public are strongly advised against any unauthorized transaction with the closed banks, or any attempt by individuals to remove, conceal, retain, or interfere with the assets, records, or properties of the banks, as this may constitute a violation of the law that could attract appropriate legal consequences,” Gambo stated.

The corporation said it has mobilised resources to ensure an orderly resolution of the failed institutions, stating, “The NDIC has commenced the process of the orderly closure of the failed banks with their immediate takeover, verification and payment of insured sums to eligible depositors.”

As the NDIC works to protect depositors through the resolution process, financial experts and consumer advocates have raised concerns about the potential impact of the closures on financial inclusion and access to banking services in affected communities.

Speaking in an interview, the President of the Bank Customers Association of Nigeria, Professor Uju Ogubunka, said the closure of 46 microfinance banks could disrupt local credit systems and affect access to financial services in the communities they served, according to The Punch.

He said, “The economy, of course, would also have to suffer for it because the roles they have been playing within the economy, they will no longer play those roles.

“If we don’t have other banks and financial institutions to absorb those roles, then that means there will be a vacuum, or at least there will be limitation in those services.”

Ogubunka said the mass licence revocations could undermine years of efforts to expand grassroots financial inclusion, warning that market women, smallholder farmers, and small business owners are likely to be among those most affected.

Despite growing concerns, the regulators and the NDIC have assured stakeholders that the liquidation process will follow due process to minimise disruption for customers. Under existing statutory guidelines, the NDIC said it will use the affected banks’ branches to verify depositors and pay insured deposits in line with the revised deposit insurance coverage limits.