NDIC, Judiciary Seek Closer Synergy for Depositors Protection, Financial Stability

Nume Ekeghe

The Nigeria Deposit Insurance Corporation (NDIC), in collaboration with the National Judicial Institute (NJI), has underscored the need for stronger collaboration between the legal and financial regulatory systems to enhance depositor protection and maintain the stability of Nigeria’s banking sector.

Speaking at the opening of a sensitisation seminar for Federal High Court judges held in Lagos yesterday, the acting Managing Director/Chief Executive of the NDIC, Mrs. Emily Osuji, said the corporation continues to contend with legal challenges that affect the timely resolution of failed banks despite landmark progress, including the prompt closure of Heritage Bank.

In her welcome address, she commended the judiciary for ongoing support, however pointed to persistent challenges ranging from protracted litigation and improper garnishee orders, to enforcement actions taken against NDIC assets—even when the law clearly prohibits it.

Speaking on the  seminar theme ‘Strengthening Adjudication and Depositor Confidence in the Banking System’ Osuji said: “The corporation is still faced with some legal challenges that include, long judicial proceedings, execution of judgment against assets of the Corporation for liability of banks in liquidation.”

“Recent proceedings concerning the liquidation of Heritage Bank have presented opportunities to observe the application of the

NDIC Act 2023, particularly section 69 of the Act which restricts the court from issuing certain orders against the NDIC when it is performing its core mandates, such as reimbursing insured deposits or acting as a liquidator. This section further charges a claimant who has an issue with the NDIC in these scenarios, to only seek recourse of monetary damages, and these are capped at specific amounts (e.g., the insured deposit for depositors, or the nominal share value for shareholders). However, the corporation’s discharge of the afore mentioned mandate had, in some instances, been restricted by Court Orders.

Furthermore, legal actions are being entertained against failed insured institutions and the NDIC without leave notwithstanding the provisions of the law prohibiting same. Similarly, enforcement actions, such as garnishee orders or attachments, against the NDIC itself or the assets of failed insured institutions are permitted by the Court.”

She called for continued engagement with the judiciary as a key stakeholder to uphold the integrity of the deposit insurance system and ensure that failed bank resolutions do not suffer undue legal bottlenecks.

“The corporation has improved public awareness initiatives and frequently engages the judiciary as critical stakeholders. This is expected to further assist the Corporation in achieving its mandate as a deposit insurer in line with the Core Principles of Deposit Insurers as set out by the International Association of Deposit Insurers (IADI).”

The Chief Justice of Nigeria, Kudirat Kekere-Ekun, represented by the Chairman of the Education Committee of the (NJI) Board of Governors, Hon. Justice John Inyang Okoro, underscored the seminar’s strategic importance in equipping judges with the tools to fairly and efficiently adjudicate financial disputes.

“The financial sector is the lifeblood of any nation’s economy,” Justice Okoro said. “A stable and resilient financial system is fundamental to economic prosperity, and at the heart of this stability lies an effective deposit insurance mechanism.”

He added: “The theme of this seminar aptly captures the urgent need for judicial officers to be adequately equipped in adjudicating matters relating to deposit insurance. The courts serve as the final arbiters in financial disputes, and as such, our role in ensuring fair, timely, and legally sound resolutions cannot be compromised.”

Justice Okoro further highlighted the emergence of fintech and digital finance as added pressure points for adjudication and policy coherence. He noted that the rise of decentralised finance “presents new challenges for deposit insurance regulations” and called on judicial officers to be “forward-thinking in addressing emerging complexities.”