Recession: How NDIC is ensuring stability in financial sector

As Nigeria’s economy continues to unravel, the Nigeria Deposit Insurance Corporation (NDIC), in line with its objective, is well positioned to ensure stability in the country’s financial sector.

The corporation is not leaving any stone unturned in carrying out supervision of the insured licenced banks to ascertain their financial conditions for the purpose of safeguarding depositors and contributing to financial system stability in Africa’s biggest economy. MATHEW DADIYA reports.

With the current crops of management in NDIC led by the Managing Director and Chief Executive Officer Umaru Ibrahim, Nigerians and indeed depositors have no cause for panic because the deposit insurance system engendered needed reforms to provide a further layer of protection to depositors and complement the role of the Central Bank of Nigeria in ensuring safe and sound banking system.

In its bid to build depositors and investors confidents in the Nigerian banking sector, the NDIC has designed what it calls ‘Stakeholders Town-hall Meeting’ to interact with member of the public thereby giving depositors the opportunity to get clarification on any issue that is contentiously perceived.

The Managing Director said “It is crystal clear that for the NDIC to remain committed to the discharge of its mandate, consumer protection must be at the centre of its operational policies and programmes. The creation of the NDIC Stakeholders Town Hall Meeting is therefore a bold step towards full expression of the Corporation’s commitment to depositor protection.

” I am happy to announce that this programme has been designed as an annual event to be held in all the 6 geo-political zones of the country.”

He added that the forum also aimed at “enlightenment of our stakeholders, particularly bank customers on the benefits of savings culture, cooperative societies, cottage industries and petty trading in order to raise the standard of living amongst Nigerians.”

Analysts in the financial sector said consumer protection in the financial services sector goes hand in hand with financial literacy. Perhaps, consumers of financial services and products need to be enlightened to make informed and sound investment decisions.

They also posited that the responsibility for this falls on the shoulders of bank customers themselves, the operators and the regulatory authorities.

The MD recalled that “the NDIC was establish established in 1988 and commenced operations in 1989 to administer Deposit Insurance System (DIS) in Nigeria. He explained “The objectives of NDIC include Protection of Depositors, particularly small savers by providing an orderly means of reimbursement in the event of failure of an insured banking institution. The core mandates of NDIC include Deposit Guarantee, Bank Supervision, Failure Resolution and Bank Liquidation.”

According to him, the failure resolution mandate of the Corporation allows it to extend Technical and Financial Assistance to eligible banks, assist in Purchase and Assumption (P&A) transactions, Deposit Transfer, Merger and Acquisition (M&A), Bridge Bank as done in 2011 in collaboration with the CBN to prevent monumental banking crisis in Nigeria and outright liquidation of failed institutions.

The Managing Director noted that it was also worth mentioning that through the bridge bank initiative, over three (3) million depositors and 6,600 jobs were saved.

It is also on record that the Corporation in collaboration with the CBN in 2009 midwifed the establishment of Asset Management Corporation of Nigeria (AMCON). AMCON was purposely set up to purchase toxic assets from the banking institutions and engage in debt recovery of such non-performing loans.

Of course, the mandate of AMCON is quite different from that of the NDIC. The NDIC sits on the Board of AMCON and contributes its technical knowledge, expertise and experience in distress resolution.

During one of its town hall meetings, the CEO of NDIC said that the interaction with stakeholders has come at a very auspicious time when the country is dire need for positive attitude to revamp the economy. This, according to him, would further demonstrate the Corporation’s determination towards promoting consumer protection in furtherance of the quest for financial education to achieve financial inclusion.

It is instructive that the Corporation has not only established different platforms for meaningful engagement with each of the stakeholders but has come up with the NDIC Stakeholders Town Hall Meeting to specifically address the concerns and expectations of depositors, especially small savers who either lack or have limited capacity to fight for their rights in the complex financial system thrown up by modern banking, the MD stated.