The Nigeria Deposit Insurance Corporation (NDIC) has reiterated its commitment to ensure safety of the banking system in line with the mandate for its establishment by the Nigerian government.
This was made known in a speech read by Mr Nuhu Bashir, Director, Corporate Communications, NDIC, when he represented the Chief Executive Officer of NDIC, Bello Hassan, on the occasion of the Corporation’s Special Day at the ongoing 2023 Lagos International Trade Fair.
Hassan extolled the public policy objective of the Deposit Insurance Scheme in Nigeria, saying that this policy aims to protect the interests of small depositors by providing a mechanism for reimbursement in the event of imminent or actual bank failures among other issues.
“This is done while entrenching safe and sound banking practices, contributing to an orderly payments system, and enhancing fair competition in the banking sector. Thus the DIS is designed as a “risk minimizer” with core functions of deposit guarantee, bank supervision, distress resolution, and liquidation of failed insured deposit-taking financial institutions” he said.
This, the NDIC Boss explained, complements the Central Bank of Nigeria, CBN, in ensuring the safety, soundness, and stability of the financial system thereby instilling public confidence in the nation’s banking system.
Hassan also emphasised the timely role played by the Corporation through interventions to depositors after the CBN revoked the licenses of some Microfinance Banks, MFBS and Primary Mortgage Banks, PMBS.
“Following the recent revocation of licenses of some MFBs and PMBs by the CBN, the NDIC promptly commenced the liquidation of these banks and began disbursing insured sums to depositors within a record time of three (3) days of the banks closure.”
“It is worthy of note that as of September 22, 2023, the Corporation had paid a cumulative insured sum of N1.393 billion to 36. 163 depositors of 110 closed MFBs and 3 Primary Mortgage Banks. Most importantly, payments of the statutory insured sums are still ongoing and depositors with funds exceeding the insured limit will receive liquidation dividends after the recovery of debts and the sale of the closed banks’ physical assets,” he said.
The NDIC is currently in the process of verifying and paying liquidation dividends to depositors and stakeholders of 20 banks in liquidation.
These banks include; Allied Bank, Peak Merchant Bank, Commerce Bank, Continental Merchant Bank, Financial Merchant Bank, Fortune Bank, Gulf Bank, Hallmark Bank, Icon Merchant Bank, Liberty Bank, Liberty Bank, Nigeria Merchant Bank, North-South Bank, Premier Commercial Bank, Prime Merchant Bank, Progress Bank, and Merchant Bank.
Furthermore, the NDIC Boss called on the general public to be mindful of falling victim to fraudulent financial services even as it tries to boost depositors’ confidence in the financial landscape through continued address to genuine cases of infractions and complaints in relation to their respective insured institutions.
“While the NDIC continues to collaborate with the Central Bank of Nigeria (CBN) in ensuring the effective supervision of banks and adherence to prudential thresholds and the Code of Corporate Governance for banks to safeguard the safety and stability of the Nigerian banking system, I would like to therefore call on the general public, especially traders and businessmen, to always ensure that their funds are saved in licensed banks and to avoid patronage of wonder banks and Ponzi schemes which always leave their victims with untold stories,” Hassan said.
In his address, the President of the Lagos Chamber of Commerce and Industry, LCCI Dr Michael Olawale Cole, applauded the NDIC for consistently being a strong safety net to safeguard systemic stability and reduce the likelihood and magnitude of financial crisis thus raising significantly the importance of the corporation in the last two decades.
Cole said the presence of a strong safety net is key to building and restoring confidence in the financial system.
“In that regard, the NDIC plays an essential role in protecting customers and reducing the likelihood of bank runs. However, with the faster pace of liberalisation and globalisation, maintaining financial stability has become an all-pervasive objective. Furthermore, with the significantly growing size of banks and in particular depositors’ funds, the safety and soundness of the financial sector has become very critical.”
The LCCI President also highlighted the significant growth attained in the banking sector and its contributions to the economy despite the various challenges confronting the sector.
“Our banks are much stronger and more resilient despite evolving and tough operating landscapes including high monetary policy rates, high inflation, concerns on debt sustainability and low savings due to squeezed consumer income, etc. Today, the assets of the Nigerian banking system are in excess of 50% of the country’s GDP.”
Data from the CBN showed that the total number of banking institutions operating in the country currently stands at about 800 and the number of licensed banks increased to 34 at the end of October 2023, comprising 24 commercial banks, 6 merchant banks and four non-interest banks.
The number of Microfinance Banks, MFBs are 719, while Primary Mortgage Banks (PMBS) and Payment Service Banks (PSBS) are 32 and 3 respectively.
Likewise, data according to the NDIC, reveals that at the end of 2022, the total number of banks insured are 983, out of which 32 are Deposit Money Banks, DMBs, 3 are Non-interest banks, NIBs, 880 are Microfinance Banks, MFBs, 34 are Primary Mortgage Banks, PMBs, 5 are Payment Service Banks and 29 mobile operators, MMOS.
Meanwhile, the President of Lagos Chamber of Commerce, Mr Cole urged the NDIC to strategise on how to mitigate future bank collapse, strengthen its resolution options including Bridge Bank Mechanism and the purchase and assumption options.
Cole also said that the Corporation must strategically address the issues of cumbersome procedures of reimbursement of depositors, ineffective supervision of participating institutions and inadequate legal and regulatory framework and issues around the NDIC Act of 2023.
