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NDIC targets N400bn debt recovery to pay deposit insurance claims

NDIC targets N400bn debt recovery to pay deposit insurance claims

The Nigeria Deposit Insurance Corporation (NDIC) on Wednesday said it planned to recover over N400 billion debt from financial institutions in liquidation, in order to pay deposit insurance claims.

The financial institutions in liquidation include commercial banks, microfinance banks, primary mortgage banks and mobile money operations.

Bello Hassan, managing director/chief executive, disclosed this at the workshop for business editors and finance correspondents association (FICAN), in Owerri, Imo State.

“The value of the debt that we are about to recover, if you take into account all the banks in liquidation that is the Deposit Money Banks (DMBs), the microfinance banks, the primary mortgage institutions, is well beyond N400 billion, and that is what we are expecting to recover so that we can pay depositors of those banks in liquidation,” he said.

Hassan said the NDIC has reached an advanced stage in the review of the maximum deposit insurance coverage, to account for the impact of macroeconomic developments, since its last review in 2010.

“It is our belief that the new coverage level once approved will go a long way in reinforcing depositors’ confidence in the NDIC’s deposit guarantee scheme,” he said.

Deposit insurance coverage is the amount the NDIC pays to depositors of banks in case of failure.

The CEO noted that he laid out the key focus of the management team under his leadership to scale up the deposit insurance framework; provide timely support to insured institutions as and when required; ensure faster and orderly resolutions of liquidated insured institutions; as well as assist the monetary authority in promoting the stability of the banking system.

He said the NDIC has complemented the consumer protection efforts of the Central Bank of Nigeria (CBN) through enhanced public awareness on the benefits and limitations of the deposit insurance system and financial literacy, to reduce the rate at which small depositors are being defrauded, thereby enhancing confidence in the banking system.

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“We have invigorated our liquidation activities, and greatly increased debt recovery rate leading to declaration of 100 percent liquidation dividends to depositors of over 20 deposit money banks in-liquidation; and we have also improved our systems, processes and procedures to promote transparency and accountability in our operations, amongst other humble achievements,” Hassan said.

As part of the Corporation’s achievements, he said the NDIC has introduced the Single Customer View (SCV) framework that has enhanced speedy payment of insured sums to depositors of closed banks.

He added that the Corporation has enhanced collaboration with the bar and the bench, leading to speedy dispensation of justice and more informed judgements on failed banks cases.

“We have equally put in place policy and framework on Alternative Dispute Resolution for out-of-court settlement, which had enabled us to resolve some hitherto protracted failed bank litigations; we have reviewed the Framework for Differential Premium Assessment System (DPAS) to make it more risk sensitive and account for

significant developments that have taken place in the Nigerian banking system since its adoption in 2008; and we have established a special desk at the Economic and Financial Crimes Commission (EFCC) which has energized investigation and prosecution of parties responsible for failure of banks,” he said.