•FG promises to address concerns over amended BOFIA
Ndubuisi Francis in Abuja
The Nigeria Deposit Insurance Corporation (NDIC) has expressed the urgency to fast-track the build-up of depositors’ insurance fund, currently put about N2 trillion.
The corporation said as a deposit insurer, which guarantees payment of deposits in the event of failure of a participating financial institution, shoring up the fund would enable it to pay depositors without recourse to the Central Bank of Nigeria (CBN) or national treasury.
NDIC Managing Director, Mr. Hassan Bello, said in his inaugural address yesterday in Abuja that of recent, there have been calls from the industry for the corporation, in line with the law, to help insured financial institutions that need assistance.
He said: “We want to ensure that we do that in a timely manner to promote confidence and stability in the financial system. In line with our mandate as well, we want to ensure that there is an orderly and faster resolution of liquidated financial institutions where such licences have been revoked by the CBN.
“There are a number of challenges the corporation is facing. I have taken note of the comments made by the minister. If you look at the number of institutions that have been liquidated, about 49, the rate of recovery was really not that significant considering that out of 49 banks in liquidation, only about 10 that the corporation is able to pay a 100 per cent liquidation dividend. There is a need to enhance the powers of the corporation to be able to recover debts owed to liquidated institutions.
“There has been slow growth in the deposit insurance fund. If the Act is reviewed, we will find a way to ensure that we can actually fast-track the build-up of this deposit insurance fund; this is necessary when you look back to the global crisis of 2007 and 2008 when the CBN had to bail out a number of banks; about N620 billion was injected by the CBN to liquidate those institutions and those liabilities that are being carried by AMCON (Asset Management Company of Nigeria) are due for settlement.”
Bello stated that the country cannot afford to have a similar situation should there be another crisis, adding that there is the need to fast-track the growth of deposit insurance fund to ensure that in the event of any crisis, depositors could be paid promptly without recourse to CBN or the treasury for a bailout.
Inaugurating Bello alongside the Executive Director (Operations) of NDIC, Mohammed Mustapha Ibrahim, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, said she was aware of issues that arose from the recently amended Banks and Other Financial Act (BOFIA) 2020, and expressed her willingness to resolve them.
She pledged the ministry’s continuous support for the corporation in assisting it to discharge its mandate.
She thanked the NDIC for its contributions in maintaining financial system stability and commended President Muhammadu Buhari for the choice of both the managing director and the executive director.
According to her, experience has shown that the capital market has been supportive in providing funds to finance the government’s needs.