• Tuesday, June 25, 2024
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NDIC, judiciary partner to build depositor confidence in banks

NDIC, judiciary partner to build depositor confidence in banks

Nigeria Deposit Insurance Corporation (NDIC) says it is collaborating with the judiciary to build strong depositor confidence in banks and other financial institutions through adjudication of disputes.

Bello Hassan, managing director/chief executive, NDIC, disclosed this in Lagos, at the 2024 sensitisation seminar for justices of the Court of Appeal on Monday.

He said banks primarily operate with depositors’ funds rather than the funds of the business owners. Considering the inherent risk associated with banking and the need to ensure the safety of depositors’ funds, banks are generally regulated and supervised.

“Depositors are further provided with protection by way of a deposit guarantee scheme. This scheme provides seamless and continuous access by depositors to their funds upon license revocation. Deposit insurance, therefore, becomes a critical component of safety-net arrangement put in place to ensure the protection of depositors,” he said.

The NDIC recently raised the deposit insurance coverage from N500,000 to N5,000,000 for deposit money banks (DMBs) and subscribers of Mobile Money Operators (MMOs). Accordingly, the coverage for Payment Service Banks (PSBs) and Primary Mortgage Banks (PMBs) has been reviewed from N500,000 to N2,000,000 while that of Microfinance Banks (MFBs), has been increased from N200,000 to N2,000,000.

Hassan stressed the necessity for the appellate court to consider implementing a practice direction specifically tailored for Court of Appeal cases about failed banks. Such a directive, they argued, would facilitate the swift and effective adjudication of appeal matters concerning the recovery of debts owed by failed banks and the prosecution of culpable parties contributing to their collapse.

The proposed practice direction aims to streamline legal proceedings, enabling a more efficient dispensation of justice in cases related to failed financial institutions. By providing a structured framework for handling these complex matters, NDIC believes that it will contribute significantly to the resolution of disputes and the restoration of financial stability within the banking sector.

Speaking with journalists immediately after the opening session, Justice M.B. Dongban-Mensem, president of the Court of Appeal, said the seminar held paramount significance for both the judiciary and the broader economy.

“In our society, fostering confidence in commercial transactions is imperative. Specifically, when we focus on banking, the health of financial institutions is crucial. Any ailment or failure within banks poses a significant challenge, often leading to a rush of litigants seeking resolution from the judiciary.

Represented by Justice Olukayode Bada, presiding justice, Lagos Division, she said, “The judiciary will have to set things right and draw a straight line so that in future, the problem that caused the sickness will not reoccur again. The judiciary in this case is like a medical doctor who will treat whatever is the problem with the banks with the laws of the land so that at the end of the day, investors will have confidence in our banking system and the long run in our commercial matters.

Responding to a question on bank recapitalisation, she said the “judiciary is ready in that at present we have what is called Fastrack for banking and commercial matters. So, any time they come, they are not treated like ordinary civil matters. We treat them with dispatch in the judiciary. You saw the way we handled the election petitions; that is how we handle commercial matters because it is very important to our country Nigeria.”

Also, speaking with journalists, Olumo Abdulazeez, representing the administrator of the National Judicial Institute, Justice Garba Abdullahi, said, “The romance between the National Judicial Institute, the judiciary and the NDIC has been there over the years. It is a deliberate union in the sense that the economy is about everything in any nation.”