NDIC Develops Enterprise Risk Management System

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Umaru Ibrahim

Obinna Chima

The Managing Director of the Nigeria Deposit Insurance Corporation (NDIC), Alhaji Umaru Ibrahim, has disclosed that the corporation has embarked on significant reforms which included the development of an Enterprise Risk Management System as well as the implementation of Differential Premium Assessment System (DPAS).

He listed other initiatives adopted by the corporation to include capacity building in risk-based supervision (RBS), deployment of a performance management system, enhanced Deb Recovery System and Increased Pay-out to both insured and un-insured depositors.
Umaru, said this in a goodwill message he delivered at the just concluded workshop for journalists in Yola.

He pointed out that the support of the media had been instrumental to the successful implementation of the Deposit Insurance System (DIS) in Nigeria.
The corporation recently celebrated its 30th anniversary.

The NDIC commenced operations in March 1989 following the promulgation of Decree No. 22 of 1988 (now repealed and replaced with NDIC Act No 16 of 2006) with the four broad mandates of Deposit Guarantee, Bank Supervision, Distress Resolution and Liquidation while also operating as a Risk Minimiser. Its primary public policy objectives were to contribute to financial system stability by making incidences of bank runs less likely, while also protecting depositors by providing an orderly means of resolution and compensation in the event of bank failures.

“In the first decade of its existence, the primary focus of the NDIC was the management of cases of distress in the banking system. When it commenced operations in 1989, a number of banks were already in varying degrees of insolvency. The corporation rose to the occasion in its adoption of multiple distress resolution options in line with its mandate and functions to deal with the situation at the time.

“These included the provision of some assistance in the form of direct loans, acceptance of accommodation bills; changes in the management of the affected banks, assisted mergers with other viable institutions, imposition of holding actions, and; in some instances, the outright take-over of the management and control of the banks involved.

“Other failure resolution options adopted during that era included bank liquidation. The corporation’s first experience in bank liquidation occurred barely four years after its establishment on the 21st January 1994 when the Central Bank of Nigeria (CBN) revoked the licences of two merchant banks and the corporation was appointed the provisional liquidator.

“Between 1994 and 1999, the licences of 31 banks were similarly revoked and subsequently liquidated by the NDIC through the same provision. Instructively, almost all the banks closed during that era were resolved through depositors’ reimbursement (Direct Pay-out) mechanism. The corporation also efficiently managed the operations of the Failed Banks Tribunals established by the federal government in 1994 to handle established cases of malfeasance arising from the liquidation of the closed banks,” he explained.

According to him, as of 30th June, 2019, the corporation received a total number of 35 petitions/complaints from bank customers on various issues such as ATM frauds, unauthorised funds transfers, cheque related issues and much more. Investigations and mediation were carried out where necessary and customers were appropriately reprieved.

Furthermore, he disclosed that in August this year, the corporation signed a memorandum of understanding (MoU) on experience sharing and capacity building with the Korean Deposit Insurance Corporation (KDIC) and the Taiwan Central Deposit Insurance Corporation, to further deepen the implementation of the DIS in Nigeria.

The MoU also aimed to enhance the NDIC’s capacity to understand and supervise the fintechs and the digital currencies phenomenon.

“Following the issuance of the Framework for the Licensing and Regulation of Payment Service banks (PSBs) by the Central Bank of Nigeria (CBN) which stipulated the extension of Deposit Insurance Coverage to the depositors, the Corporation will protect the depositors of PSBs and guarantee to pay them N500,000.00 as insured sum in the event of their closure,” he added.