The Honourable Chief Justice of Nigeria – Hon. Justice Dahiru Musdapher;
The Administrator of National Judicial Institute- Justice Umaru Eri;
Erudite members of the Bench and the Bar;
Members of the Board of Directors of NDIC;
Ladies and Gentlemen!
It is an honour and privilege to address such a dignified gathering of distinguished legal luminaries, including some of the beacons of the Nigerian Judiciary. I am sincerely grateful to the members of the Nigerian Bench and the Bar, our distinguished invited guests and our facilitators for finding time out of your tight schedules to attend this Sensitization Seminar for stakeholders on the Challenges to Deposit Insurance Law and Practice in Nigeria. We are by your presence assured that we can indeed count on you as committed partners in the pursuit of our vision of becoming one of the leading Deposit Insurers in the world.
The Nigeria Deposit Insurance Corporation (NDIC) was one of the financial safety net players established by Decree No. 22 of 1988, now the NDIC Act, 2006 to operate the Deposit Insurance Scheme in Nigeria. A Deposit Insurance Scheme is a financial guarantee to protect depositors in the event of a bank failure and also to offer a measure of safety for the banking system. A proper financial safety net is necessary to reduce the risk of severe financial crises. Without an appropriate financial safety net, even simple rumours of problems regarding solvency or liquidity of a financial institution have the potential to become self-fulfilling and turning into a full-blown financial crisis. With an appropriate financial safety net in place, depositor confidence tends to be greater and the likelihood of financial crises is reduced to the barest minimum. NDIC was set up as a risk minimiser and its mandates go beyond operating a ‘pay box’ institution in the Nigerian financial system. The statutory mandates of NDIC include: deposit guarantee, banking supervision, bank failure resolution and bank liquidation.
In more than twenty years of making giant strides towards ensuring that Nigeria develops a formidable Deposit Insurance System in Nigeria, NDIC was faced with numerous challenges such as:
- Ø The menace of liquidation–related litigations which make it difficult for the Corporation to completely wind up failed banks in accordance with the law and settle depositors and other creditors within a reasonable time. This is further compounded by the complex and often slow pace of litigation through our esteemed courts.
- Ø Execution of court judgements against the assets of the Corporation as the liquidator of failed banks.
- Ø Lack of proper understanding of the legal status of NDIC as Liquidator/Deposit Insurer by legal practitioners, the court and the public at large.
- Ø Difficulty on the part of the Corporation in recovering debts owed to failed banks due to inability to trace the debtors, lack of collateral documents and other related challenges.
- Ø Vulnerable funding base of the Corporation which, if not protected and systematically boosted, will gravely affect the Deposit Insurance Fund and will, in the long run, affect depositors confidence in the Nigerian banking sector.
- Ø Poor public awareness on the vision, mandates and the functions of the NDIC. Many depositors regard the NDIC as the same as a conventional insurance company.
- Ø Inadequate Legal framework. The Corporation is making concerted efforts in conjunction with the Legislature for the amendment of the NDIC Act, 2006 in order to provide for the Corporation’s supervisory and enforcement powers and comply with the Core Principles of Effective Deposit Insurance and other international best practices.
We recognize that no matter how robust the legal framework operated by NDIC is, the Corporation cannot achieve much without the cooperation and vital input from the Nigerian Judiciary, bearing in mind the fact that the Judiciary is constitutionally vested with the powers of interpretation of statutes. This sensitization seminar is one of the steps being taken by the Corporation in involving important stakeholders in its strides towards achieving greater efficiency.
Distinguished Ladies and gentlemen, for the Corporation to achieve its mandates in a more efficient and effective manner and for the Nigerian economy to thrive on the gains of a stable financial system evidenced by increased depositor confidence in Nigerian banking system, the challenges highlighted above must be addressed.
The Nigerian judiciary, legal practitioners and other esteemed stakeholders have important roles to play in ensuring that the mandates of the Corporation are realised. As our partners and stakeholders, I urge you to use your good offices and privileged positions to ensure that the Corporation is empowered and rightly positioned to discharge its mandates in the interest of the Nigerian banking system as a whole.