By Babajide Komolafe, Vanguard –
In this interview, Alhaji Umar Ibrahim, acting Managing Director/chief executive of the Corporation, disclosed that the implementation of risk based supervision would commence fully by next year, and that the corporation has commenced measures to settle depositors of distressed microfinance banks
There have been so much talk about risk based supervision. When will it be actually implemented?
It has actually started, a couple of months ago we had a pilot scheme which involved some of our staff and that of CBN, they examined two selected banks on a pilot basis and I believe before the end of the year they would go out and do more. It’s a gradual process but I believe by next year we should be able to fully unwind and go the whole hug.
Are you going to extend it to microfinance and primary mortgage institutions?
Yes, certainly, that would be easier to handle given the size of their operations. You indicated the Corporation is sending staff to Malaysia to study Islamic deposit insurance. Is this different from
what you are doing now?
Yes there is a difference and Malaysia has excelled in the area of Islamic non-interest bearing deposit insurance and that is why we are collaborating with the Malaysian Deposit Insurance Company and we are sending six of our staff for a week attachment so that by the time they come back they would be able to help us fashion out appropriate framework for a non-interest Islamic deposit insurance.
So the corporation would be introducing Islamic deposit insurance?
Yes, you know that the CBN has virtually licensed a non_interest bearing bank –-the Jaiz Bank, it’s there, though it has not actually taken off, but I believe before the end of the year they should be able to take-off and as soon as they do that their depositors must be insured.That is why we are trying to get ourselves properly organised and positioned so as to be able to do that. And there may be many others, and you also know that some of the banks have tried to develop some Islamic Banking window in Nigeria, and there again we have to come out with a framework to protect the depositors who may want to go through that too.
What is the Corporation doing about the plight of depositors of distressed Microfinance banks?
Our examiners have just come back with those of Central Bank from nationwide examination and identification of those microfinance banks.A lot of them have not been sending their returns, a lot of them have not been paying their premium and we are also aware of the hue and cry from the public, those whose money have been trapped in those banks. So we have gone round, we have done some existence checks to know those that are alive, those that are functional, those that distressed and those that are totally insolvent and very soon we would come out with a framework for handling them.
It is a very important sector of the banking system and we would do everything possible to sanitise that sector and also ensure protection of depositors. Those that need to be liquidated would be liquidated and depositors would be appropriately paid.
Is the corporation considering increasing the maximum insured deposit above the current N100, 000 levels?
Yes there is a proposal to do that for both the microfinance banks and the universal banks, and as soon as we finish all our consultation with all the stakeholders we would announce that.
What are the lessons for the corporation from the pilot scheme on the implementation of risk based supervision?
Well the lessons from that are that we should continue to encourage the banks to take risk management serious, they should put in place a very robust and efficient risk management framework and the issue of corporate governance are very serious, and on our own part we should enhance our skill and capabilities in those areas.
What will the corporation do with respect to management of distressed microfinance banks? Would they face sanctions?
Yes off course. Sanctions are always there, it is a matter of enforcement. Once you are able to identify those microfinance banks that have been mismanaged and you are able to identify the management and those responsible.