The Nigeria Deposit Insurance Corporation (NDIC) yesterday warned the public about the high risk associated with investing funds with illegal fund managers.
The caution came against the backdrop of the recent increase in investment channels arising from innovative products.
The corporation noted that there had been an increase in illegal fund managers who have been using different platforms to woo members of the public to invest their funds with them, and promising excessive returns on such investments.
However, the NDIC in a statement issued by its Director, Communication and Public Affairs Department, Mr. Bashir Nuhu, explained that as the deposit insurer, the corporation would like to inform members of the public that contrary to claims by some of these funds managers, the corporation does not insure investments with them.
He said the corporation insures only deposits of financial institutions licenced by the Central Bank of Nigeria (CBN) to accept deposits from the public.
He also urged the public to verify whether a financial institution is covered by the deposit insurance scheme of the NDIC by visiting its website for a complete list of organisations it covers.
The statement further urged the public to address any other inquiry to the corporation as well as report any entity suspected to be involved in illegal deposit mobilisation to the law enforcement agencies.
It is not the first time the NDIC and CBN have warned against patronage of illegal fund managers also known as wonder banks in the country.
The apex bank had in May 2019, warned Nigerians to desist from patronising ponzi schemes popularly referred to as wonder banks as they only exist to defraud unsuspecting customers through mouth-watering incentives.
The CBN had said: “We have made it clear that the public should not patronise any institution that is not approved by the CBN and NDIC. Before MMM came, we warned them and we will continue to say that.”
The NDIC had also said anyone who patronises ponzi schemes does that at his or her own risk as the corporation does not recognise any institution not registered by the CBN.
In the past, both regulatory institutions had reason to issue joint circular on ponzi schemes, warning they are not covered.
They stated, “Anybody who put their money in MMM and all those things, does that at his own risk. NDIC does not insure any financial institution that is not licensed by the Central Bank of Nigeria.
“And so the first question to ask yourself is that is that financial institution licensed by the CBN? No. NDIC has no business with any financial institution that is not licensed by the CBN.”
Both had continued to insist that Nigerians should not patronise financial institutions or their products if they are not certified by both the CBN and the NDIC.