A Bill for an Act to repeal and re-enact the Nigerian Deposit Insurance Corporation (NDIC) Act 2006 has passed through the second reading at the Senate.
The proposed legislation aims at empowering the corporation to pay insured deposits to depositors of insured institutions whose operating licenses have been revoked, notwithstanding litigations challenging the revocation of such failed institutions.
It was sponsored by Bassey Otu, chairman of, the Senate Committee on Banking and Other Financial Institutions, who said the bill aims to reduce the extent to which depositors are subjected to hardship anytime the erstwhile owners of the banks attempt to forestall liquidation of the failed bank.
In his lead debate, Otu explained that the proposed review would strengthen the corporation’s supervisory capacity and address other challenges in the area of liquidity of failed financial institutions, as well as ensure compliance with the principles of effective deposit insurance administration.
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He noted that the proposed re-enactment provides for the appointment of the NDIC as liquidator, rather than as provisional liquidator in the event of the revocation of license/ failure of an insured deposit-taking financial institution and compounding the power of NDIC when acting as liquidator, to ensure effective winding up of the affairs of such insured deposit.
The Act, according to him, failed to provide for measures for addressing any conflict of interest, adding that in Section 9(7) of the Bill, NDIC desires to formalise its commitment to transparency, independence, accountability and probity, which would ensure compliance with international standards and insulated it from undue political and industry influence.
He added that Section 15 of the re-enactment Bill seeks to enhance the General Reserve Fund of NDIC, which had been negatively affected by some of the requirements of the Fiscal Responsibility Act 2007.
Otu also explained that the proposed re-enactment seeks to establish the Insured Institution’s Resolution Fund (IIRF) as an open bank resolution measure for resolving distress in large insured-taking financial institutions.
He noted that given the supervisory role of the corporation in the banking industry, there is a need to address the gap that existed in the NDIC Act, 2006 to enable the corporation to protect depositors and contribute to the stability of the financial system. This, he said should be through effective supervision of insured institutions as well as providing financial and technical assistance to eligible insured institutions.
Other lawmakers who spoke in favour of the bill argued for its passage.
Senate President, David Mark referred it to the Senate Committee on Banking, Insurance and Other Financial Institutions for further legislative considerations; to report back in two weeks.
OWEDE AGBAJILEKE
