THE NDIC IN ACTION

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The National Deposit Insurance Corporation (NDIC) has consistently been in the news for the right reasons. This is probably an evidence of the excellent work the management of the banking watchdog and deposit insurer is doing.

The NDIC was established to foster confidence in the banking industry by providing insurance cover and guaranteeing the safety of deposits in banks and other financial institutions. This is done by the corporation in line with the provisions of the act establishing it. Thus, in the event of failure of an insured financial institution, the payment of the insured deposits to customers of the concerned bank is guaranteed up to a specified limit.

The corporation is equally assigned the role of fostering monetary stability; the promotion of efficient payment system, competition and beneficial innovation in the Nigerian banking industry. Through its banking supervision role, the NDIC detects signs of risk of failure. It takes immediate action to ensure that the signs of failure caused by unsafe and unsound banking practices are eliminated.

The latest result of such prompt action by the NDIC, which put the corporation in a positive limelight, was the liquidation of the distressed Skye Bank Plc. The liquidation of that bank and the creation of Polaris Bank to ensure that millions of depositors of Skye Bank do not lose their money are commendable. The Assets Management Corporation of Nigeria (AMCON) will inject N786 billion to return the bank to life and profitability under its new name.

A statement from the corporation explained that “The NDIC carried out the Bridge Bank option to resolve the SKYE Bank Plc in order make certain that its depositors are fully protected as their deposits with Polaris Bank limited remain insured under the NDIC Act, and that the customers of SKYE Bank Plc can also continue to transact their businesses with Polaris Bank Limited.”

Another very important related explanation and point made by the NDIC is that “the adoption of the Bridge Bank model for the resolution of SKYE Bank Plc guarantees that most of the employees of that bank will not lose their jobs and they will continue their employment with Polaris Bank Limited under fresh contracts of employment.”

Indeed, guaranteeing the depositors’ money from any possible loss despite the liquidation of Skye Bank Plc can deepen the confidence of Nigerians in depositing their money in banks instead of the risky habit of keeping it in their shops and homes, thus promoting financial inclusion.

Additionally, the fact that most employees of the liquidated bank, who are bread winners to their families, will retain their jobs in Polaris Bank is commendable. This will boost the morale of young persons aspiring to join the banking industry and have stable careers.

However, the Chief Executive Officer of the NDIC lamented cases of abuse of extant banking regulations and ethical standards, which would not be tolerated because they have negative impact on confidence in the banking industry and the entire financial system. He cited the recent involvement of some deposit money banks in illegal foreign exchange transfers and called for better corporate governance and ethical behaviour by the banks.

The recent unanimous election of the Managing Director and Chief Executive Officer of the Corporation, Umaru Ibrahim, as the Chairman of the Africa Regional Committee (ARC) of the International Association of Deposit Insurers (IADI) is another good story from the NDIC. It projects the good name of Nigeria in the worldwide deposit insurance industry.
Salisu Na’inna Dambatta is a retired Federal Director of Information