KEYNOTE ADDRESS DELIVERED BY
ALHAJI UMARU IBRAHIM, MNI, MD/CEO
NIGERIA DEPOSIT INSURANCE CORPORATION (NDIC)
AT THE SENSITIZATION SEMINAR FOR STAKEHOLDERS:
“THE CHALLENGES TO DEPOSIT INSURANCE LAW AND PRACTICE”
HELD ON THE 23RD OCTOBER, 2015
AT THE NATIONAL JUDICIAL INSTITUTE, ABUJA.
Erudite members of the Bench,
Legal Luminaries here present,
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 established by Decree No. 22 of 1988, now the NDIC Act, 2006 as a financial safety net 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 of 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 mandate goes beyond operating as ‘pay box’ institution in the Nigerian financial system to include deposit guarantee, banking supervision, bank failure resolution, and bank liquidation. In it’s more than twenty years of making giant strides towards ensuring the development of a formidable Deposit Insurance System in Nigeria, NDIC has been confronted with some challenges such as:
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 litigations in our esteemed courts;
Execution of court judgements against the assets of the Corporation as the liquidator of failed banks;
Lack of proper understanding of the legal status and role of NDIC by legal practitioners, the court and the public at large as Liquidator being distinct from its role as Deposit Insurer;
Difficulty on the part of the Corporation in recovering debts owed to failed banks due to inability to trace the debtors, and non-collateralization of credits;
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 system;
Poor public awareness on the vision, mandate and the functions of the NDIC. Many depositors regard the NDIC as one of the conventional insurance companies.
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 adequately provide for the Corporation’s supervisory and enforcement powers and in compliance 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 mandate and objectives 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 mandate of the Corporation is realised. As our partners and stakeholders, I therefore humbly request you to use your good offices and positions to ensure that the Corporation is rightly empowered to discharge its mandate in the interest of the Nigerian banking system as a whole.