Banks, Insurance Companies Default In Housing Contributions – FMBN

The managing director of Federal Mortgage Bank of Nigeria (FMBN), Mr Gimba Kumo yesterday told the Senate that commercial banks and insurance companies have defaulted payment of their contributions to housing scheme for 24 years.

He called for the recapitalisation of the mortgage banks to N250 billion to further empower the banks to meet the housing challenge in Nigeria.

The current capital base of the federal bank is N5 billion, which the capital base of those of the states currently stands at N2.5 billion.

Briefing the Senate Committee on Banking and other Financial Institutions, Kumo said that the financial institutions had flouted the Act, which compelled them to contribute, since 1992.

Kumo also lamented that the Central Bank of Nigeria (CBN), which is supposed to enforce compliance, had also not done anything to ensure the banks paid their contributions to the National Housing Scheme.

He said. “Section 5 of the NHF Act, provides that commercial banks are supposed to invest 10 percent of their portfolio to the fund. Insurance companies, on their part, are supposed to invest 20 percent of their life insurance funds and 25 percent of their non-life funds into the fund.

“Section 11 provides that where the banks refuse to pay, the CBN is supposed to force the banks to contribute to the fund at an interest rate of 4 percent. This has not been complied with since 1992.

“We have been following up with the CBN, but nothing has been done. So, this is an area that we need you support to ensure that the law is enforced. FMBN is supposed to be recapitalised to the tune of N250 billion. But as I talk to you today, the capital base of the bank is only N5 billion.

“Even the N5 billion, it is only the Federal Government that has paid its own share of 50 percent, CBN that has 30 percent is yet to pay, the Nigerian Social Insurance Trust Fund (NSITF), which has the remaining 20 percent is yet to pay. I am happy to inform you that the current Minister of Power, Works and Housing has written to the CBN and the NSITF to pay their contributions immediately”.

The MD who added that the FMBN was seriously in need of the contributions to meet the over 16 million deficit in the housing sector urged the Senate to assist the Bank in enforcing other sources of revenue.

Noting that the non-formal sector was also being encouraged to contribute to the fund, Kumo said the involvement will increase the contribution to the fund by 6,000 percent and raise the monthly contribution from N2.5 billion to N3.5 billion.