Supervision

Banking supervision seeks to reduce the potential risk of failure and ensures that unsafe and unsound banking practices do not go unchecked. Bank supervision is a supervisory function charged with the responsibility of ensuring the safety and soundness of the banking system as a whole.
Books and affairs of every licensed insured institution are examined as a means of meeting its supervisory mandate. This function is performed through the off-site surveillance and on-site examination of the books and affairs of the banks, which exceptions are reported and recommendations made on how the observed lapses can be corrected, and the implementation of such recommendations is monitored through scheduled post examination visits to the affected banks.

While on the other hand Regulation involves providing input into developing and interpreting legislation and regulations, issuing guidelines, and approving requests from regulated financial institutions. The three main types of supervision are Transaction Based, Consolidated and Risk Based Supervision.

Types of Bank Supervision
 
Bank supervision is a supervisory function charged with the responsibility of ensuring the safety and soundness of the banking system as a whole. Books and affairs of every licensed insured institution are examined as a means of meeting its supervisory mandate.
This function is performed through the off-site surveillance and on-site examination of the books and affairs of the banks, which exceptions are reported and recommendations made on how the observed lapses can be corrected, and the implementation of such recommendations is monitored through scheduled post examination visits to the affected banks.
While on the other hand Regulation involves providing input into developing and interpreting legislation and regulations, issuing guidelines, and approving requests from regulated financial institutions.


The three main types of supervision are Transaction Based, Consolidated and Risk Based Supervision.

Supervisory Guidelines & Standards

Supervisory Standards and Guidelines are set by supervisors with a view to ensuring effective supervision. Similarly, the committee of banking supervisory authorities develops supervisory standards and guidelines with the hope that member countries will adapt them with a view to encouraging convergence towards common approaches and standards

Supervisory Activities
Bank Supervision in the NDIC is the responsibility of three departments, namely, the Bank Examination Department (BED), the Insurance and Surveillance Department (ISD) and Special Insured Institutions Department (SIID). On-site examination is carried out by BED and SIID while the ISD is charged with the responsibility of maintaining off-site surveillance over all insured banks. These functions however overlap and are complementary. Both the on-site and off-site examinations seek to protect depositors’ fund and to prevent systemic failure.

Focus of Supervisory Activities

The CBN/NDIC during bank supervision and examination focus on the main aspects of banking operations. These include capital requirement, loan concentration, liquidity ratio, provisioning, internal control and management among others.

List of Insured Institutions
This is a list of Insured institutions which are all deposit-taking financial institutions licensed by the Central Bank of Nigeria (CBN) such as

  • Universal Banks (deposit money banks);
  • Micro-finance Banks – (MFBs); and
  • Primary Mortgage Institutions (PMIs).

 

Membership is compulsory as provided under the NDIC Act No 16 of 2006.