Nigeria Deposit Insurance Corporation
The history of Nigeria Deposit Insurance Corporation (NDIC) has its origin in the report of a committee set up in 1983 by the Board of Central Bank of Nigeria (CBN), to examine the operations of the banking system in Nigeria. The Committee in its Report recommended the establishment of a Depositors Protection Fund. Consequently, the Nigeria Deposit Insurance Corporation was established through the promulgation of Decree No. 22 of 15th June 1988.
This was part of the economic reform measures taken by the then government, to strengthen the safety net for the banking sector following its liberalization policy and the introduction of the 1986 Structural Adjustment Programme (SAP) in Nigeria.
The phenomenal increase in the number of banks from 40 in 1986 to 120 in 1992 led to:
• Increased Competition amongst banks leading to sharp practices
• People of questionable integrity becoming bank owners and managers
• Inadequate Manpower
• The coming together of strange bedfellows due to the licensing requirement that banks maintain adequate geographical spread.
Vision: To be one of the best Deposit Insurers in the World.
Mission: To protect depositors and contribute to the stability of the financial system through effective supervision of insured institutions, provision of financial/technical assistance to eligible insured institutions, prompt payment of guaranteed sums and orderly resolution of failed insured financial institutions.
The NDIC -Nigeria Deposit Insurance Corporation, is an independent agency of the Federal Government of Nigeria. The purpose of the deposit insurance system is to protect depositors and guarantee the settlement of insured funds when a deposit-taking financial institution can no longer repay their deposits, thereby helping to maintain financial system stability.
Core Values & Beliefs
To be effective in the discharge of its mandate, the Corporation is guided by the following core values and beliefs:
• Teamwork: We work together to achieve common goals.
• Respect & Fairness: We treat others like we would like to be treated.
• Integrity: We are committed to doing what is right and just at all times.
• Professionalism: We strive for excellence in all aspects of our work.
• Passion: We put passion into everything we do; it helps us to achieve more.
Mandate and Power
The Deposit Insurance Scheme (DIS) being implemented by the NDIC was designed as a Risk Minimiser, with the following mandate
• Deposit Insurance
This is perhaps the most significant and distinct activity of the Corporation. As an insurer, NDIC guarantees the payment of deposits up to the maximum limit in accordance with its statute in the event of failure of an insured financial institution.
• Bank Supervision
The Corporation supervises banks so as to protect depositors; foster monetary stability; promote an effective and efficient payment system; and promote competition and innovation in the banking system.
Banking supervision is an essential element of the Nigeria deposit insurance scheme as it seeks to reduce the potential risk of failure and ensures the unsafe and unsound banking practices do not go unchecked.
• Failure Resolution
One of the primary roles of the NDIC is to ensure that failing and failed institutions are resolved in a timely and efficient manner
• Bank Liquidation
The bank liquidation option is always adopted by the corporation for banks that fail to respond to failure resolution measures. Liquidation process involves orderly and efficient closure of the failed institutions with minimum disruption to the banking system, cost-effective realisation of assets and settlement of claims to depositors, creditors and where possible, shareholders.
Functions
Section 2 of the Nigeria Deposit Insurance Corporation Act 2006 stipulates the functions for the Corporation as follows:
• Insuring all deposit liabilities of licensed banks and such other financial institutions(hereinafter referred to as “insured institutions”) operating in Nigeria within the meaning of Sections 16 and 20 of this Act so as to engender confidence in the Nigerian banking system;
• Giving assistance to insured institutions in the interest of depositors, in case of imminent or actual financial difficulties of banks particularly where suspension of payments is threatened, and avoiding damage to public confidence in the banking system;
• Guaranteeing payments to depositors, in case of imminent or actual suspension of payments by insured institutions up to the maximum as provided for in section 20 of this Act;
• Assisting monetary authorities in the formulation and implementation of policies so as to ensure sound banking practice and fair competition among insured institutions in the country;
• Pursuing any other measures necessary to achieve the functions of the Corporation provided such measures and actions are not repugnant to the objects of the Corporation.
For More Info, visit www.ndic.gov.ng
