The Nigeria Deposit Insurance Corporation (NDIC) yesterday said as at September this year, Microfinance Banks (MfBs) lost over N5 billion to fraud and other cybercrimes.
It said the increase in use of the internet in MfBs has created a space for cyber-attacks, social engineering was identified as the greatest source of identity attack. It therefore urged banks and the public to take precautions.
The Director of Special Insured Institutions Department (SIID) at NDIC, Mrs Veronica Ogbo-Ikwe, disclosed this at the 18th workshop for business editors and Finance Correspondents Association of Nigeria (FICAN) in Ibadan.
She said: “Over N5.04 Billion was lost to fraud as at Sept, 2021, according to the Nigeria Inter-Bank Settlement System Plc (NIBSS).
“Regulatory efforts aimed at stemming the scourge of fraudsters in the sub-sector include the introduction of Biometric verification Number (BVN), the three-tier Know your Customers (KYCs), regular supervision and offsite monitoring etc.
“The whole gamut or retinue of the supervisory responses are targeted at building resilience, sustainability, capacity of the Micro Finance institutions so that they are well-situated to deliver on the expected goals.
“A resilient, transparent, stable, de-risked Microfinance industry offers mutual benefits to the private sector and the economy as it: provides stable, sustainable returns – private sector; promotes or engenders confidence in the financial system; improves financial inclusion and; promotes the much sought after inclusive economic development of the country.”
She however noted that some of the other challenges facing the microfinance sector are hostile economic climate, escalating insecurity, disruptions in the financial space by financial technologies (FinTechs) and cybercrime.
Others are weak institutions – capital base-vulnerable to losses, deadline for the Central Bank of Nigeria (CBN) new recapitalisation requirement, funding – difficult to grow organically, unattractive to investors, weak collateral, deviation from the MfB business model, weak corporate governance, and ponzi schemes “wonder banks”, demarketing and diminishing confidence in MfBs.