Banks in liquidation: NDIC pays N113bn to 443,949 insured, uninsured depositors — MD


…Says adequate funding is crucial to effective implementation of deposit insurance system

By Matthew Denis

The Managing Director and Chief Executive of Nigeria Deposit Insurance Corporation (NDIC), Bello Hassan has disclosed that the corporation has paid a whopping total sum of N113billion to 443,949 insured and uninsured depositors at June 2022.

The MD made the disclosure at the ongoing 2022 NDIC Financial Correspondent Association of Nigeria (FICAN) workshop in Portharcourt on Monday.

He said, “It is gratifying to note that this workshop has evolved into the flagship capacity building and engagement platform by the Corporation, not only with the media, but with the members of the civil society groups and the Association of Corporate Affairs Managers of Banks (ACAMB).

“The NDIC bank liquidation mandate entails reimbursement of insured and uninsured depositors, creditors, and shareholders of banks in-liquidation.

“The liquidation activities, as at June 30, 2022, covered a total of 467 insured financial institutions in-liquidation, comprising of 49 DMBs, 367MFBs, and 51 PMBs.

“At June 2022, the NDIC had cumulatively paid N11.83 billion to over 443,949 insured depositors and over N101.37 billion to uninsured depositors of all categories of banks in-liquidation.

“It is most profound for me to say that, out of the 49 DMBs in-liquidation, the Corporation in September, 2022 declared 100 per cent liquidation Dividend in 20 of those institutions, meaning that the Corporation has realized enough funds from their assets to fully pay all depositors of the listed banks.

“As at June 30, 2022, the NDIC provided deposit insurance coverage to a total of 981 insured financial institutions. The breakdown includes: thirty-three (33) DMBs made up of Twenty-Four (24) Commercial Banks, Six (6) Merchant Banks and Three (3) Non-Interest Banks (NIBs) plus Two (2) Non-Interest Windows; 882 Microfinance Banks (MFBs); 34 Primary Mortgage Banks (PMBs); Three (3) Payment Service Banks (PSBs) and 29 Mobile Money Operators. Bank Liquidation.”

According to him, “This event has over the years, promoted better understanding of the Corporation’s roles in achieving financial system stability. It has also strengthened and broadened the media’s ability to interrogate and interpret topical issues in the financial services sector in general.

“The Corporation has been able to promote better understanding of its mandates and activities among members of the civil society organisations, thereby fostering collaboration in the area of enlightenment of the public on the benefits of the Deposit Insurance System (DIS).

“With the coming onboard of the Corporate Affairs Managers of Banks (ACAMB), I am optimistic, that the same high level of partnership, will be fostered towards educating bank depositors about The importance of the DIS through your consistence in the seminar.

“This reality has not only put a demand on regulators and supervisors in the sector across the world to enhance surveillance, but it has also called for stronger collaborations, in order to deliver services that are laced with constantly improved values to the banking public and the society at large.

“It is in line with the foregoing, that the Corporation has carefully chosen the theme of this year’s workshop as: ‘Boosting Depositors’ Confidence Amidst Emerging Issues and Challenges in the Banking System.’

“It is instructive to add that we have painstakingly selected highly seasoned facilitators from within the Corporation, the Central Bank of Nigeria (CBN) and the media to do justice to the various papers already scheduled for presentation at this workshop.

“I  also outlined the vision and policy direction of the Corporation under my humble stewardship to include our determination to scale up the deposit insurance framework; the provision of timely support to insured institutions as and when required; to ensure faster and orderly resolutions of liquidated insured institutions; and to continue to assist the CBN in promoting the stability of the banking system.”

Mr. Hassan stressed that in the area of scaling-up the deposit insurance framework and ensuring faster and orderly resolutions of liquidated insured institutions, in May this year, with the active participation of the relevant stakeholders, we had developed and deployed the Single Customer View (SCV) platform for the Microfinance and Primary Mortgage Banks in order to strengthen our processes and procedure for data collection.

The platform would not only ensure availability of quality, timely and complete data to the NDIC, but would eliminate delays often experienced in reimbursing depositors following revocation of institutions’ licenses by the CBN.

“The final phase of the implementation of the SCV for Deposit Money Banks (DMBs) will be achieved through the incorporation of the SCV template as part of the ongoing Integrated Regulatory Solution (IRS) jointly being developed with the CBN. Consumer Protection. In the area of consumer protection, the Corporation has strengthened its complaints resolution platforms, which include the Toll-Free Help Desk, social media handles and Complaints Desks in the Bank Examination, Special Insured Institutions and Claims Resolutions Departments, as well as our Zonal Offices, to receive and process complaints from depositors.Deposit Guarantee.”

Also, the Director of Communication and Public Affairs Department of Nigerian Deposit Insurance Corporation (NDIC), Mr. Bashir Alhassan Nuhu disclosed that adequate funding is very crucial towards achieving effective implementation of deposit insurance System.

He made the disclosure during the 2022 Financial Correspondent Association of Nigeria (FICAN) workshop held in Portharcourt on Monday.

Mr. Bashir stressed that the Corporation is providing a good working environment for collaboration with media and civil society organisation to ensure effective sensitisation to the public on the insurance policies on deposits.

While presenting a paper on understanding the roles of premium contribution in ex-ante Funding of Deposit Insurance system, Assistant Director of NDIC, Dahiru Ahmad said Deposit Insurance system (DIS) is a Financial guarantee to depositors in events of banks failure.

“A DIS is therefore one of the components of the financial safety net as other components includes effective Supervision, lender of last-resort facility which the Central Bank of Nigeria provide temporary emergency Liquidity support to solvent depository Institutions.

He stressed that some of the advantages of Ex ante system funding includes transparent and confidence in the efficacy of the scheme, helping to raise the probability of safeguarding taxpayers from banks failure and funds being readily available when failure occurs.

Speaking on Explicit deposit insurance System he argued that the system being administered by NDIC adopted an ex ante funding arrangement to discharge her mandate of protecting depositors by ensuring accumulation and maintenance of funds to cover deposit insurance claims in terms of failure.