By Barnabas Esiet.
The Nigeria Deposit Insurance Corporation (NDIC) has reiterated its dedication to maintaining financial stability in Nigeria through deposit insurance.
Managing Director and Chief Executive of NDIC, Bello Hassan, decleared this at the 2024 NDIC Business Editors and Finance Correspondents Association of Nigeria (FICAN) Workshop in Lagos.
Hassan emphasized the timeliness of the workshop’s theme, “Strengthening Nigeria’s Financial Safety-Net – The Role of Deposit Insurance,” given the dynamic global financial landscape.
He underscored NDIC’s unwavering mission to protect depositors and collaborate with the Central Bank of Nigeria (CBN) to ensure banking sector stability.
NDIC’s core mandates include providing deposit insurance cover, supervising insured financial institutions, resolving distressed banks, and ensuring orderly resolutions in the event of bank failures.
Confidence in the banking system is crucial, Hassan noted, as it is key to maintaining financial system stability.
The recent closure of Heritage Bank, whose license was revoked by the CBN in June 2024, exemplifies NDIC’s effective response.
Acting as liquidator, NDIC swiftly reimbursed depositors, paying insured deposits of up to ₦5 million per depositor within four days of the bank’s closure.
This was achieved through the innovative use of Bank Verification Numbers (BVN) to locate depositors’ alternate accounts.
Hassan reiterated NDIC’s commitment to paying depositors with balances exceeding the insured limit of ₦5 million through liquidation dividends from the bank’s assets.
The Corporation has initiated debt recovery and asset realization to facilitate timely payment of uninsured deposits.
NDIC’s responsibilities extend to creditors of the defunct bank, who will receive payments after all depositors have been fully reimbursed.
Hassan acknowledged the vital role of the media, civil society groups, and corporate affairs managers in advocating for the deposit insurance system.
The two-day workshop aims to deepen participants’ understanding of NDIC’s role in safeguarding Nigeria’s financial system amidst global and domestic challenges.
This event marks another milestone in NDIC’s efforts to ensure a robust and stable financial safety-net in Nigeria.
The concept of deposit insurance is designed to protect depositors in the event of bank failure and offer a measure of safety for the banking system.
A well-designed financial safety net contributes to the stability of a financial system, but if poorly designed, it may increase risks, notably moral hazard.
In Nigeria, the Deposit Insurance Scheme (DIS) was established by Decree No. 22 of 1988. The NDIC has been instrumental in maintaining financial stability, and its commitment to this mission remains unwavering.
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