Breaking News

NDIC considers advance payment of insured deposits

By Babajide Komolafe
The Nigeria Deposit Insurance Corporation (NDIC)   is considering advance payment of insured deposits once the licence of any insured institution is withdrawn by Central Bank of Nigeria (CBN).
Managing Director/Chief Executive, Alhaji Umaru Ibrahim NDIC disclosed this when he received the Chairman and Members of the House Committee on Banking & Currency of the Federal House of Representatives during their oversight visit to Lagos Office of the Corporation.

Ibrahim told the Committee that this initiative is intended to ease the being hardship experienced by depositors in the event of bank closures. He however pointed out that the initiative would require a robust and effective information system in order to capture the balance on the ledger of every depositor prior to the closure of any insured bank.

He said that despite mapping out various sensitization campaigns from 1994 to 2013, such as the use of Depositors’ Tracers, Agent Banks and zonal offices, the Corporation was still having an accumulated sum of N1.9 billion unclaimed by depositors in 48 deposit money banks (DMBs) in-liquidation. He however said that the Corporation would explore the use of social media and its zonal offices to enhance depositor sensitization campaigns.

Alhaji Ibrahim also informed the Committee that the CBN and NDIC were effectively collaborating to encourage banks not only to continue to imbibe sustainable banking principles but also to support power, agriculture and housing sectors.
The NDIC CEO however noted with concern the listing of the Corporation among public institutions that remit 25 percent of their internally generated revenues to the federal government instead of 80 per cent of its annual budget surplus to the federation account.

This, according to him, not only posed serious threat to the NDIC deposit insurance fund (DIF) and ability to discharge its mandate but also ran contrary to global best practice which excluded deposit insurance organisations to pay such levies to government. He therefore appealed to the visiting committee to do whatever it could within its powers to reduce the burden on the Corporation by removing its name from agencies that should remit 25 percent of their internally generated revenues to the federal government.

In his remarks, the Chairman of the House Committee on Banking & Currency, Hon. Jones Onyereri said the object of their visit was in fulfilment of the oversight functions of the National Assembly. Hon. Onyereri disclosed that the Committee was determined to support the regulatory and supervisory authorities in preventing distress in the banking industry.

The Committee Chairman, who led the visiting team, noted with concern the prevalence of declaration of huge profits by banks as a result of their realisation of high returns from investment of public sector funds at their deposal.
According to him, his Committee supported the withdrawal of 50 percent of the public sector funds from the banks by the CBN.

The banks, according to him, had however resorted to charging high interest rates which constrained the growth of the real sector of the nation’s economy.
He therefore advised the banks to make concerted efforts on deposit mobilisation from alternative sources; pointing out that if the ugly trend of high interest charges continued, the Committee would be left with no option than to push for full withdrawal of the public sector funds from the banks.


Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.