NDIC Earmarks N258.8Bn To Redeem Failed Banks’ Depositors In 2019

To redeem the loss of depositors of licensed banks in the event of closure, the Nigeria Deposit Insurance Corporation (NDIC) has set aside N258.8 billion in 2019 to take care of such situation.

Of this amount, N109.686 billion is for Deposit Money Banks (DMBs) while N149.081 billion is for depositors Of Primary Mortgage Banks (PMBs) and Microfinance Banks(MFBs).

NDIC Boss Umaru Ibrahim who stated this while presenting the details of the Corporation’s budget before the House of Representatives’ Committee On  Insurance and Actuarial Matters explained that the estimates were consistent with the Corporation’s mandate of providing financial guarantee to depositors of failed banks towards promoting public confidence in the banking sector. 

This, he added, is critical to the sustenance of the stability of the entire financial system.

In fulfilment of the Corporation’s mandate to provide Technical assistance to licensed banks, the NDIC Boss, disclosed that the Corporation, in collaboration with the Central Bank of Nigeria (CBN), has invested in the acquisition of a new software called the Integrated Regulatory Solution (IRS) for a more robust surveillance and supervision of insured financial institutions in the country. According to Ibrahim, the software would enable DMBs generate real time online data among themselves, help regulators to access data online from the DMBs.

Ibrahim also disclosed that the National Association of Microfinance BanksUnified Information Technology Platform (NAMBUIT) was introduced by CBN/NDIC and Association of MFBs to enhance the operational capacity of the MFBs. The CBN/NDIC are financing the project in the ratio of 60/40 per cent respectively in view of the importance of the project to the growth of the MFB sub-sector.

On the issue of NDIC’s mandate of providing financial assistance to eligible licensed and insured banks, Ibrahim disclosed that a total of N140 billion was provided for Deposit Money Banks while the sum of N300 million is providedfor Microfinance and Primary Mortgage Banks. He urged the banks to take the opportunity to access the funds offered by the Corporation whenever they are required. 

Responding, Hon.Olufemi Fakeye, the Chairman commended the Corporation for its pro-activeness in the prevention systemic crisis in the nation’s banking system, adding that the various mechanisms adopted by the Corporation since inception to resolve distress in banks had not only prevented the manifestation of crisis in the system, they also contributed immensely to the high level of public confidence experienced in the financial sector.

He noted that the corporation has carved a niche for itself as the leading Deposit Insurer in Africa especially with its role in the resolution of the defunct Skye Bank and the establishment of Polaris Bank Ltd as a bridge bank.

He charged NDIC to be more pro-active in detecting and addressing distress in banks as a way of sustaining public confidence in the system.