NDIC set to investigate Directors of Eyowo and 182 other MFBs

Eyowo denies shutting down, claims it is pivoting into 'financial connectedness'

The Nigeria Deposit Insurance Corporation (NDIC) has revealed its intent to initiate an investigation into the directors of 183 banks whose licenses were recently revoked. Among these Microfinance Banks is Eyowo, a technology company that until recently operated as a digital bank.

The announcement was made by Mr Bello Hassan, the Managing Director of NDIC, during a capacity-building workshop for law enforcement agencies held in Lagos. Mr Hassan said the move signifies the NDIC’s commitment to addressing the challenges posed by financial malpractices and bank fraud cases while upholding integrity within the banking sector.

By taking this step, NDIC aims to work with the Economic and Financial Crimes Commission (EFCC) and the Nigerian police, in order to hold accountable those responsible for misconducts that may have contributed to the license revocations, reflecting a proactive approach toward maintaining the stability of the banking industry.

License revocation: NDIC set to investigate Directors of Eyowo and 182 other MFBs
Eyowo’s run-in with the CBN

The Central Bank of Nigeria, in May, revoked the operating license of Eyowo, a digital microfinance bank, among several others. Following the license revocation, the company told its customers would not be able to send or receive money from their accounts for some time as it was working to regain its operating license.

Customers became anxious and expressed their displeasure over their inability to complete transactions or at least pull out their funds. In spite of this, Eyowo assured that there was no reason to be concerned, promising that “We remain committed to ensuring the security of your money and apologize for any inconveniences that you will experience during this period,” the bank said.

Yomi Adedeji, the co-CEO, later declared that the business would shortly resume providing financial services utilizing its Payment Solution Service Providers (PSSP) license at the beginning of June. Adedeji made this disclosure in a customer update, stating that the bank is now 98.8% prepared to resume operations and emphasizing that Eyowo will continue to offer its payment services as one of the 75 businesses recognized by the CBN as PSSPs.

In June however, an internal mail from the company revealed that it was wrapping up Softcom and Eyowo as you know it. “This means all our processes, procedure, responsibilities and departments have all been dissolved,” the mail read. This development followed a particularly dismal performance in its Q1 2023 numbers.

The company would eventually backtrack, insisting that it was only pivoting into a financial technology platform that provides “financial connectedness and intelligence for everyday money and living choices to everyone with a smartphone.” While it is still unclear what this means, the NDIC is nonetheless intent on not letting it end at that. Indeed, the NDIC noted the status of the company as CLOSED which supports Technext’s report that the company has shut down its operations.

Read also: Exclusive: Eyowo to shut down operations Tuesday, June 27, lays off most employees

NDIC investigation

Mr Bello Hassan, represented by Mr Henry Fomah, the Head of the Legal Department of NDIC, stated that 12 prosecution cases are currently in progress across different courts. This update was provided during a collaborative session involving multiple agencies. 

He added that the licenses of 183 MicroFinance Banks (MFBs) and Primary Mortgage Banks (PMBs) were recently revoked by the Central Bank of Nigeria, and this action may necessitate the involvement of NDIC in scrutinizing certain directors and officers of these establishments.

According to Mr Henry, the objective is to hold accountable any individuals identified as responsible for contributing to the downfall of these institutions, ensuring that those found responsible for the collapse of these banks are held legally accountable.

“There are 25 ongoing investigations at the Nigeria Financial Intelligence Unit (NFIU), 11 with the EFCC, and five concluded investigations with the Federal Ministry of Justice for advice and prosecution,” says Mr. Henry.

He added that while keeping in mind the good impact of such collaboration, the corporation will continue to improve the cooperation between all members in the fields of law enforcement linked to the investigation and prosecution of financial malpractices. He urged the task force members not to waver in their efforts to carry out the corporate’s mission but should carefully achieve their goals.

NDIC initiates payments to depositors of Eyowo and 182 other closed banks

The Nigeria Deposit Insurance Commission (NDIC) has commenced the process of paying back depositors in the country’s 179 microfinance banks and four major mortgage banks whose operating licenses were revoked. According to the Commission, Eyowo is one such microfinance bank described as closed.

Depositors affected by the liquidation were asked to provide replacement bank accounts in commercial banks for their payments, according to the commission.

New NDIC MD/CE and ED, Operations Resume Duty – NDIC

In the statement, depositors who do not have alternate accounts in commercial banks and those who have yet to be verified were asked to visit the nearest NDIC office with proof of account ownership and a verifiable form of identification for verification and payment. Also, called on those yet to be verified to visit the claims page of the commission’s website to download the online verification form.

Since it does not provide insurance coverage for depositors in MfBs and mortgage banks above N250,000, the commission highlighted that it has started selling the assets of the banks for depositors who held deposits of more than N250,000.

According to the commission, “Depositors with amounts above insured limits of Two Hundred Thousand Naira for microfinance banks and Five Hundred Thousand Naira for Primary Mortgage bank should note that the Corporation has commenced sales of assets and recovery of debts owed the closed banks to pay their balances.”

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