Stakeholders in the finance sector on Tuesday expressed support for the proposed amendment to strengthen and reposition Nigerian Deposit Insurance Corporation (NDIC) to be a key stabilising and revitalising tool in the Nigerian economy, making it more effective in its operations and more responsive to the expectations of depositors.
Some of the stakeholders, who supported the proposed amendment, are Ganiyu Ogunleye, former NDIC managing director, depositors’ group and representatives of banks and insurance companies.
On his part, Umaru Ibrahim, NDIC managing director/CEO, expressed optimism that the proposed amendment will greatly impact on the corporation’s ability to perform its functions more effectively towards achieving its set goal of becoming one of the leading deposit insurers in the world.
Ibrahim stated that the proposed amendments will help in “protecting depositors and contributing to the stability of the financial system through effective supervision of insured institutions.”
He maintained that the proposed amendment when passed into law will ensure a safe and sound banking system in Nigeria, stressing that “a deposit insurance scheme remains a financial guarantee established to protect depositors in the event of a bank failure and also to offer a measure of safety for the banking system.”
Ibrahim added that “deposit insurance scheme forms part of the financial safety net necessary to reduce risk of severe financial crisis. Without an appropriate financial safety net, problems regarding solvency or liquidity of a financial institution have the potential of turning into full-blown financial crisis.
“With an appropriate financial safety net in place, depositor confidence is enhanced and the likelihood of financial crisis is reduced to the barest minimum.”
He maintained that NDIC was primarily set up as a “risk minimiser” with broad mandates of deposit guarantee, supervision of insurer financial institutions, bank distress resolution and liquidation, adding that the corporation remains the “only deposit insurer in West Africa” as well as the oldest and most robust deposit insurer in Africa.
Ibrahim, who raised alarm over the threatening safety, stability and soundness of the banking system which led to the failure of some banks in 2009, argued that “the instability caused by the meltdown gave rise to the need for review of the legal framework for depositor insurance in most jurisdictions including Nigeria.”
He, however, noted that any attempt to whittle down the powers of the corporation as a risk minimiser, would be counter-productive to the stability and safety of the banking sector.
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