By Ibrahim Wuyo, Kaduna
The Chairman, Senate Committee on Baking, Insurance & other Financial Institutions, Senator Uba Sani has said that the Nigeria Deposit Insurance Corporation (NDIC) is a strategic institution which the National Assembly must do all in its powers to ensure it performs optimally.
The Senator who represents Kaduna Central, spoke in Kaduna on Friday at the opening of a 3-day retreat of his Committee and the NDIC, with the theme: “Financial System Stability: A Panacea for Sustainable Economic Growth and Development – The Role of NDIC”, saying economic growth and development cannot adequately be achieved without the complementary efforts of the institutional frameworks of the financial system which NDIC is one of them.
According to him, the “retreat is timely as it will afford us the opportunity to reflect deeply on the challenges of stabilizing the financial system in a distressed economy.
“The role of the NDIC in this process will be brought to the fore and its experiences, particularly since the COVID-19 pandemic, would be shared and lessons are drawn. Strategies would be mapped out to further strengthen NDIC and reposition it to contribute even more effectively to our economic recovery efforts.
This ‘s a task we must carry out with total dedication and commitment.
NDIC is a strategic institution that the National Assembly must do all in its powers to ensure it performs optimally,” he said.
He explained the NDIC was established with the objectives of contributing to financial system stability; protecting small and less financially sophisticated depositors by providing an orderly means of resolution and compensation in the unlikely event of failure of their insured financial institutions.
“As we all know, financial system stability reinforces trust in the banking system. The importance of financial system stability cannot be gainsaid as it is an essential requirement for measuring price stability, policy goals of the Central Bank of Nigeria and also for the healthy development of the economy.
It ensures that individual financial institutions are sound enough to carry out their financial intermediation function adequately, without assistance from external institutions, including government.”
“Economic growth and development cannot adequately be achieved without the complementary efforts of the institutional frameworks of the financial system which NDIC is one of them. It is therefore imperative to ensure the existence of a robust and positive relationship between the key players in the financial sector for the achievement of steady and sustainable economic growth and development,” he said.
Earlier in his remarks, the Managing Director/ Chief Executive of the NDIC, Mr Bello Hassa said the theme of the retreat was very topical, particularly in the light of current developments in the economy and challenges presented by the complexity of the financial system and the role the sector plays in promoting economic development.
He said over and over again, the government was keen to provide confidence in the financial system by putting in place financial safety net to promote financial system stability and support economic growth and development.
“Deposit insurance system is an important component of the financial safety net.
The main objective of the deposit insurance system is to compensate depositors in the event of banks failing to fulfil their obligations.
The mechanism is an important means to gain public confidence in the banking system and achieve financial and banking system stability, which is one of the most important elements of economic growth and development, especially in a
developing economy like ours.”
” Deposit insurance aims to achieve two main goals. The first goal is to ensure that depositors will not lose their deposits held with the bank if the bank becomes insolvent and subsequently fail. The second goal is to contribute to the stability of the financial system by engendering public confidence in the banking system.
Distinguished Chairman and Members, the important role of the financial system in the economy have in recent times comes under threats as a result of the risk posed by cybersecurity breaches to the safety and stability of
the financial system. Today’s financial system operates in a digital environment to deliver services to its stakeholders in a very efficient way.”
“The use of technology is inevitable. Financial institutions have had to harness technological advancements such as fintech, to be efficient and remain competitive. The increased reliance on such digital infrastructure has led to exposure to risks, such as cyber-attacks. Given the financial and technological interconnectedness among the financial institutions, losses due to cyber-attacks not only affect individual banks but also pose a damaging risk to the entire financial system with serious implication for economic growth and development.”
“At this juncture, I am pleased to inform you that the Corporation in collaboration with other key stakeholders has been proactive in managing the risks associated with cyber insecurity. The NDIC has taken important
steps at ensuring the safety of the Nigerian banks and the protection of depositors, in line with its mandate. For instance, the NDIC in 2020 established a Fintech and Innovation Unit’ to effectively respond to the challenges of cyber threats among other challenges of the Fintech innovations.”
“Also, the Corporation had used this platform to commence supervisory measures for digital banks, enhance existing consumer protection measures, especially as regards digital deposit, through enhanced collaboration with other safety-net players.
Distinguished Chairman and Members, the Corporation will continue to engage and cooperate with all relevant key stakeholders, notably among which is the National Assembly through this very important Committee of the
Senate to address issues that are germane to the efficient operation of the deposit insurance system in Nigeria and by extension the sustenance of the safety and stability of the nation’s financial system.”
“It is, therefore, our strong belief that through the learning-points that may prop up from papers to be presented and ensuing deliberations that will follow at this retreat, we will not only come up with a roadmap that would enhance the role of the deposit insurance system in achieving financial system stability but also set out
framework for empowering the Corporation to discharge its mandate more effectively through the instrumentality of the National Assembly.”
“With the support of the Chairman and distinguished Members of this very important Senate Committee, the Corporation will continue to contribute its quota to the nation’s economic growth and development by ensuring financial system
stability,” he said.
In a goodwill message, the Chairman, NDIC Board of Directors, Mrs Ronke Sokefun, said the role of the NDIC could not have been more appropriate at this crucial period considering recent happenings in the global and national economy occasioned by the COVID-19 pandemic.
Mrs Sokefun who was represented by Mr Mustapha Adewale explained that the stability of the financial system in a developing nation like ours is inextricably linked with economic growth and societal welfare.
She registered her appreciation for the positive working relationship between the Corporation and the National Assembly through the Uba Sani Committee, saying it has been strengthened by the Committee’s continuing support for the NDIC.