The Nigeria Deposit Insurance Corporation (NDIC) which commenced operations in March 1989, recently celebrated 25 years of remarkable service, keeping fidelity to its vision of being the leading deposit insurer in the world, with a Mission succinctly articulated, to embrace the protection of bank depositors, and in the process contribute to the stability of the financial system. The mandate of the Corporation as amply articulated in its enabling Act, which recently was the subject of a public hearing encompassed bank deposit guarantee, supervision, distress resolution and liquidation. The twelve- member Board of Directors of the Corporation with a part time Chairman had evolved at inception from a six member Board with the Governor of the Central Bank as the Chairman of the Board.
Alhaji Umaru Ibrahim, the amiable current Managing Director of the Corporation, is a thorough bread professional in every sense of that word, who has been at the helm of the affairs of the Corporation, commencing from August 1, 2009 and only recently, based on adjudged exceptional performance had for the first time in the history of the Corporation his tenure, alongside those of other members of the Board, renewed on July 31, 2013. We shall now proceed to recount some of the remarkable achievements of the Corporation in the discharge of its core mandate commencing with its role of the guarantor of the deposits of failed financial institutions which as it is clear is the one mandate which most compatriots often readily associate with the Corporation.
Driven by the need to continue to innovate and upgrade the operations of the Corporation, a rebranding project which entailed a total overhaul of the Corporation’s processes, procedures and systems was undertaken. The new brand formally launched on October 31, 2013 was a deliberate effort to retool and reenergize staff towards achieving the NDIC’s vision of being one of the leading Deposit insurers in the world. To this end, core values were determined with the acronym: HRDPP (Honesty, Respect and Fairness, Discipline, Professionalism and Teamwork, and Passion) to guide the staff as they strive to keep fidelity to the Corporation’s Vision and Mission. This new brand was expected to engrain in the public mind, the key mandate of the Corporation which is depositor protection rather than that of just another insurer.
In a swift reaction to the yearnings of the population for an increase in coverage levels and in order to enhance confidence of the public in the financial system, the maximum deposit insurance levels were increased in 2010 from N 200,000 and N 100,000 to N 500,000 and N 200,000 for Deposit Money Banks (DMBs) and Micro Finance and Primary Mortgage Banks respectively. Between 2009 and 2013 the Corporation paid a cumulative sum of N 93.51 billion as liquidation dividend to 250,497 depositors as at December 31, 2013 as against the cumulative sum of N 60.84 billion paid to 169,831 depositors in 2008. In the process, the number of banks for which the Corporation had declared the payment of final dividend of 100 per cent of total deposit indicating that all depositors had fully recovered their deposits stood at fourteen banks. Furthermore the sum of N 1,728.4 million had been declared as dividends to 699 creditors of the banks-in-liquidation in 2013 as against 0.76 billion declared in 2008 to 665 creditors. With the gale of revocation of the licenses of Micro Finance Banks (MFBs) which witnessed the revocation of the licenses of 103 MFBs in September, 2010 with an additional 83 MFBs affected in November, 2013 a cumulative payment of N 2,524 billion was made to 5,303 depositors as at December, 2010. It is sometimes not readily appreciated what level of confidence such a development infuses into the banking system thereby contributing in no small measure to the promotion of the banking habit and the deepening of the financial system in the country with all the fundamental benefits for the effective of monetary policy.
Some other remarkable developments with respect to bank failure resolution included the novel adoption of Bridge Banks following due consultation with the Central Bank and the Ministry of Finance for the resolution of the problems arising from the defunct Afribank Plc, Bank PHB Plc and Spring Bank on August 5, 2011. The Bridge Bank concept had a salutary effect on the banking system as it preserved and sustained operations of the three affected banks in all their branches and allowed over 3.7 million depositors to continue to enjoy banking services in the premises of the affected banks. The Corporation also appointed banks based on the geographic spread of their branches and therefore closeness to customers to continue with the payment of depositors of failed banks who could not file their claims during the period of direct payment of insured deposits. NDIC developed an electronic database on debtors of failed banks which is regularly updated to provide status enquiry to regulatory bodies in the country. The Corporation engaged in effective media broadcast of some of its key activities and programs for dissemination of relevant information. The Corporation however continued to face the challenge of inability to locate some of the closed PMBs whose licenses have been revoked by the Central Bank and had to contend with litigations by erstwhile shareholders of closed banks and sometimes their creditors thereby undermining the effectiveness of the Corporation in the pursuit of its key mandate.
In collaboration with the Central Bank NDIC regularly conducted annual examinations of banks in the period under review. With the MFBs and PMBs shared equally between both institutions while the reports of such investigations were exchanged upon completion of the examinations. Such investigations enabled the NDIC to take proactive action in order to protect the depositors and guarantee the safety and soundness of the financial system. In addition the NDIC also conducts special examinations or investigations of banks where the bank has been conducting its business in a manner detrimental to the interests of its depositors or when special petitions have been received from interested parties.
The NDIC organizes annual Financial Correspondence Association of Nigeria (FICAN) Workshop in an effort to educate the media on its mandate and operational framework. This workshop is deliberately held at different carefully selected locations in the country. I recall with profound nostalgia that I was privileged to be one of the facilitators for the edition held on 28 to 29th November, 2011 at Dutse, Jigawa State. It also organizes workshop for High Court Judges and Justices of Appeal Court to appraise the members of the bench handling liquidation and closed bank cases on the legal challenges confronting the Corporation in its dual role as deposit insurer and liquidator. The Corporation undertook a study to identify the causes of ATM and other electronic frauds in the country and also the study of financial literacy in the country to identify constraints as well as propose financial literacy programs to fill identified gaps. It also leveraged on the intelligence at its disposal on bank failures in the Country to embark on the development of case studies as a teaching aid to inform all concerned to be in a better position to prevent such occurrence in the future. Again I recall that I handled three of such case studies. The Corporation had developed early warning system of bank distress in Nigeria adopting approaches which included: Discriminate Analysis Model, the Logit/Probit Models and the Credit Risk approach based on option Pricing Theory.
The Corporation embarked on a number of Corporate Social Responsibility(CSR) projects, which included the granting of financial assistance to several educational institutions in the country to improve on their learning facilities. To this end a total amount of N 591.8 billion had been disbursed to 32 educational institutions in the country for various developmental projects. The Corporation as part of its Social Responsibility mandate undertakes the sponsorships of sporting activities to promote and develop sporting skills at the grassroots which include the under-18 SSS volleyball championship, Ibrahim Gaidam Under-20 Hockey Tournament and Open Table Tennis Championship, Ekiti State, Benue State inter local government Basketball competition, Bayelsa Male and Female wrestling Championship, Oyo State annual disabled sports competition and FCT Minister’s Under 17 Football Competition. It also regularly comes to the succor of the victims of natural disasters and violence in the country by extending financial assistance to them. The Corporation primary challenge remains finding the capacity for prompt settlement of depositors as and when the need for such payments crystallizes and to augment its funding base to place it in a robust position to continue to remain faithful to its core mandate.
DAILY INDEPENDENT
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