NDIC clarifies position on its liquidation powers

The Nigeria Deposit Insurance Corporation (NDIC) has denied some newspaper reports that the Corporation was seeking powers to liquidate insurance companies and (or) terminate the insurance firms’ licences.

The above misrepresentations were published in some national dailies on Wednesday, July 9, 2014, with the captions, “NDIC to liquidate insurance companies,’’ “CBN faults proposed NDIC powers to liquidate insurance companies,’’ and “CBN challenges NDIC over insurance companies liquidation,’’ among others. The erroneous publications were sequel to the public hearing held on Tuesday, 8.

As a deposit insurer and liquidator of insured deposit taking financial institutions, NDIC says the liquidation of insurance companies does not fall under the purview of the Corporation.

“The Corporation wishes to make it categorically clear that its proposed amendments bill, which is before the National Assembly, does not seek for powers to liquidate insurance companies or terminate the insurance firm’s licences as erroneously published in the national dailies,” it says in a statement.

The NDIC was established in 1989 vide the NDIC Act of 1988, with powers among others to supervise insured institutions, resolve banks distress conditions and to act as liquidator of closed insured financial institutions whose licences have been revoked. These powers were not only retained by the NDIC Act 2006, which replaced the NDIC Act of 1988, but were strengthened for greater effectiveness.

The NDIC Act of 2006 had enabled the Corporation to collaborate effectively with the CBN in resolving banking crises in Nigeria, particularly the crises of 2009.

However, emerging challenges after the crises as well as the experience garnered in the operation of deposit insurance in Nigeria in the past twenty-five (25) years have necessitated the need for a further review of the 2006 Act July 2014. The proposed amendments are therefore to enable the Corporation discharge its mandates effectively and efficiently.

Some of the amendments and or new provisions being proposed are: Prompt payment of insured deposits following failure of an insured institution, powers to deal with parties at fault i.e. Directors and officers who cause the failure of an insured institution, power to reimburse insured depositors notwithstanding pending court cases, prevention of execution of judgement against the assets of the institution by reducing time of reimbursement (payment to depositors) from 90 days to 60 days.