Why our Act is under review for Buhari’s assent before end of 9th Assembly — NDIC

By Moses Adeniyi

The Nigeria Deposit Insurance Corporation (NDIC) has said it is working assiduously to ensure the review of the Act governing its operation is finalised before the end of the 9th Assembly to enable President Muhammadu Buhari assent to the bill for effect into law before leaving office.

The Commission noted that the Act which was last reviewed about 17 years back is due for review bearing in mind new dynamics in the financial system.

According to the Managing Director, Nigeria Deposit Insurance Corporation (NDIC), Mr. Bello Hassan, the review is important to enable the Corporation effectively carry out its function of protecting interests of depositors of financial institutions, while building the confidence of financial stability in the Country.

Bello who spoke at an editors forum to brief media chiefs on the activities of the Corporation, said as a core safety net within the financial system, it is important that the bill be given expeditious attention to meet up with the demands of the financial system which the 2006 Act finds difficult to catch up with.

“Deposit Insurance is one of the critical services required for more financial stability. It is one of the core safety net within the financial system, so that more people would begin to have more confidence into the banking system and get formally on-boarded.

“Deposit Insurance is to ensure that a depositor does not lose his deposit in the event that a bank is liquidated. Because if a bank is liquidated, in most cases you discover that it has more liabilities than assets, so which means potentially depositors are going to lose money and that is why deposit insurance must be taken to ensure they don’t lose (their) money.

“The last time the NDIC ACT was reviewed and enacted was in 2006 and you will agree with me that the financial system has undergone tremendous changes since then and even there is a need for us to get that Act updated.

“Let me admit that we enjoy tremendous support from the National Assembly and I’m optimistic that before this 9th Assembly runs down, we will be able to push through this so that the President can assent to that bill

“There are a lot changes which are being proposed and we believe by the time the Act is passed, it will strengthen NDIC and make it to be able to operate more effectively to deliver on its core mandate,” he said.

According to the Corporation, the bill under review would introduce into the NDIC Act, new provisions that would address some challenges of the Corporation, some of which were listed to include judicial misleading verdicts, such as those bordering on distinguishing NDIC assets against that of financial institutions; protracted legal actions; delayed resolutions among others.

Responding to questions if the current difficulties customers are facing to make withdrawals due to the naira redesign wouldn’t affect confidence in the banking system, Bello said, “You take your deposit to banks because you know banks are regulated and you have the confidence that when you go there tomorrow, you get the money.

“What is happening now is not that your money is lost, but it is just there are some challenges associated with these redesign and I believe they have given assurance that they are doing everything possible to make sure that all these challenges are eliminated. I don’t think that should shake anybody’s confidence.”

Presenting a paper at the 2022 NDIC Editors Forum, themed, “Deposit Insurance System (DIS) and Financial System Stability,” NDIC Director, Claims Resolution Department, Mr. Kazeem Sule, said the NDIC bill under review would further address certain challenges the Corporation is currently facing, such as low level of awareness of the Corporation’s mandate; poor record keeping in most financial institutions affecting liquidation processes, recovery of assets to prove status of debtors, and affecting litigations.

“That is why we have had a number of amendments in our bill so that we can be effective in the performance of our role.

“We are continuously engaging the National Assembly to let them know what we do from time to time so that they can understand and when the time comes, they can pass the bill as soon as possible,” he said.

Noting what he described as “error of judgement,” he clarified that the assets of a failed bank is different from those of the Corporation, saying there is a difference between the Corporation as a liquidator and as a conservator.

On cases of judgements against the assets of the Corporation and its roles of managing the assets of a failed bank, he said, “as a conservator, the Corporation reserves the assets of a failed institution, manages it and sells the assets to be able to settle the depositors” who are claimants of failed financial institutions, while as liquidators, it administers the winding-up process of an institution to meet up liquidation expectations.

Lamenting issue of media war, he said, “We also have the issue of negative press, we remember there were a number of sponsored campaign against the Corporation from promoters of banks creating doubt in minds of the public on the effective role which the Corporation plays in protecting them.”

He disclosed further that internally, the Corporation has deployed some deposit insurance technologies to aid resolution of failed institutions among others, while increasing public awareness to build financial stability confidence.

On misleading judicial verdicts, he disclosed  that the Corporation has gone ahead to have enlightenment courses with judicial stakeholders on its roles in the industry.