My Lord, the Chief Judge of the Federal High Court of Nigeria, Hon. Mr. Justice John T. Tsoho
My Lord, the Administrator of National Judicial Institute, Hon. Mr. Justice Salisu Garba Abdullahi (rtd.)
My Lord, the Chief Judge of Akwa Ibom State, Hon. Mr. Justice E. F. F. Obot
My Lords, the Honourable Judges of the Federal High Court here present
Our distinguished Senior Advocates of Nigeria (SAN) here present and other Paper presenters
The Executive Director (Ops), NDIC
The Executive Director (Corporate Services), NDIC
Directors from NJI and Staff of NDIC here present
Ladies and gentlemen.
1. It is my pleasure and indeed a great honour for me to welcome you all, to this year Sensitization Seminar, being organised by the Nigeria Deposit Insurance Corporation (NDIC) in conjunction with the National Judicial Institute (NJI), for Judges of the Federal High Court.
2. My Lords would recall that the relationship between the Corporation and the Judiciary, particularly the Federal High Court, is predicated on the desire to ensure continuous interaction with the judiciary whom we recognised as a major Stakeholder. The NDIC Sensitisation Seminar for Judges of this Court and other Superior Courts of Records in Nigeria started in 2012, and in Collaboration with the NJI is being held annually except for the past three years, due to the disruption occasioned by the COVID-19 Pandemic.
3. I most sincerely thank my Lords for finding time to attend this seminar which main objective is to share ideas on law and practice of deposit insurance in Nigeria. As you are aware, the Deposit Insurance System (DIS) as a component of the financial safety net is vital for the development of the economy of any nation. The Deposit Insurance Scheme was established in Nigeria to protect bank depositors and promote confidence in the banking system.
4. The practice of Deposit Insurance Scheme in Nigeria commenced in 1989 with the promulgation of Decree No. 22 of 1988 that established the NDIC, which was repealed and replaced with NDIC Act, No. 16 of 2006 and now re-enacted as NDIC Act No. 33 of 2023. The Corporation is responsible for implementing the Deposit Insurance Scheme in Nigeria. The overreaching objectives in the establishment of the Deposit Insurance Scheme in Nigeria, is to protect depositors in the event of failure of the insured institutions, thereby engendering confidence and curtailing the incidence of bank runs in the system. For the past 34 years of its existence, the Corporation has recorded tremendous achievements in discharging the mandate reposed on it by its enabling law. The core Mandates of the Corporation are:
(a) Deposit Guarantee
Deposit guarantee is the fulcrum of DIS, which entails that depositors’ funds in licensed deposit-taking institutions in Nigeria are insured, and the reimbursement of the insured sum is guaranteed by the Corporation in the event of the failure of the financial institution. The Corporation as deposit insurer, is responsible for the reimbursement of depositors in the event of failure of the institutions, up to the maximum limit in accordance with the NDIC Act. Currently, the maximum claim for depositors of Deposit Money Banks (DMBs), Primary Mortgage Banks (PMBs); Payment Service Banks (PSBs); and subscribers of Mobile Money Operators (MMOs) is N500,000 per depositor, per deposit taking institution, while Micro-finance Banks (MFBs) have a maximum coverage limit of ₦200,000 per depositor per MFB. The excess deposit above the insured sum will be regarded as a claim to be paid fully to the depositors (given priority) from the debt recovered and assets realized during liquidation.
(b) Bank Supervision
The Corporation was established as a Risk Minimizer, authorized to monitor the health of insured deposit taking institutions through off- site surveillance and on-site examination in collaboration with the Central Bank of Nigeria (CBN). The Corporation performs this oversight role to ensure the safety and soundness of the banking system and promote financial system stability.
(c) Distress Resolution
The Corporation provides financial and technical assistance to eligible failing or failed insured deposit taking institutions, to ensure that they are resolved in a timely and cost-efficient manner. The responsibility of distress resolution is shared with the CBN. The financial assistance could be in the form of loans, guarantees and accommodation bills, while technical assistance, could take the form of assumption of control and management of a failing institution, change of management or assisted merger/acquisition with another viable institution. The Corporation, in collaboration with the CBN, decides on the most effective and efficient resolution option to adopt in resolving a failing insured institution in the interest of depositors and the banking system.
(d) Bank Liquidation
Upon the revocation of banking license, the Corporation has the statutory powers, to liquidate the insured financial institution whose license has been revoked. The discharge of this mandate involves the orderly and efficient winding up of the failed deposit-taking institution with minimum disruption to the banking system, prompt payment of insured sums, cost-effective realization of assets and settlement of claims of depositors, creditors and shareholders. Again, it is pertinent to note that depositors have priority of claim over other claimants.
5. In carrying out the mandate enumerated above, the role of the judiciary cannot be overemphasized. Right from revocation of banking license all through liquidation and termination of liquidation activities, the judiciary plays a critical role in resolving disputes that evolve. The Corporation, since inception, has been confronted with lots of challenges, which include the misconception of its mandate and basic principles of Deposit Insurance that ironically resulted in other challenges such as;
a. Execution of judgement against the Corporation for liabilities of banks in-liquidation.
b. Attachment of the assets of the Corporation (NDIC) including garnishee of Corporation’s corporate accounts.
c. Difficulties in recovery of debts owed the failed banks.
d. Difficulties in bringing to book (criminal prosecution) directors, managers and officers of failed banks that might have contributed to the collapse of their banks.
e. Lack of specialized Winding-Up Rules for Failed Financial Institutions as provided for in Section 56(1) and (2) of the NDIC Act 2023.
6. Despite these challenges, we are glad to report that the CBN and NDIC had recorded tremendous achievements in the intervention and resolution of problem banks through the various Resolution Options such as, Bridge Bank mechanism, Purchase and Assumption option, etc. The Corporation over the years, has successfully liquidated many DMBs, MFBs and PMBs whose licenses were revoked by the CBN, and their depositors as well as other claimants paid, with some of them fully settled from debts recovered and the assets realized.
7. We are also glad to report that, the series of sensitization seminars organized by the Corporation over the years, have served as an avenue for the Corporation to interface with its stakeholders and privileged to share ideas with the judicial officers. This has resulted in a better understanding by our stakeholders (the Bar and the Bench) of the principles of Deposit Insurance. The Papers presented at these annual events have been published by the Corporation titled “Law and Practice of Deposit Insurance in Nigeria’’ and are available in two volumes to serve as a veritable reference material. They are being distributed free of charge to our stakeholders.
8. Furthermore, the Corporation in addressing some of the above challenges, had pursued vigorously the amendment of its Act, which resulted in the repeal, and re-enactment of Nigeria Deposit Insurance Act 2023. The absence of Winding-Up Rules for deposit taking institutions in-liquidation, has created a gap in procedures, we would soon approach you, my Lord, the Chief Judge of the Federal High Court, for the issuance of the Winding-Up Rules for failed deposit taking institutions, pursuant to Section 56 of the NDIC Act 2023.
9. The theme of this year Seminar “Strengthening Depositors’ Confidence in Banks and Other Financial Institutions through Speedy Dispensation of Justice’’ is anchored on the need for strategic partnering and collaboration with the Judiciary for the promotion of financial System stability in Nigeria.
10. My Lords and distinguished guests, kindly permit me at this juncture, to express my profound gratitude to the members of the Bench who has shown better understanding in Deposit Insurance practices for the sake of financial system stability in Nigeria. We are indeed grateful.
11. On this note, on behalf of the Executive Management and Staff of the Corporation, I warmly welcome you all and sincerely hope that, the deliberations and suggestions to be proffered at this seminar, will be part of guiding principles in our quest for the maintenance of stable banking system in Nigeria.
12. Thank you for your kind attention.
Managing Director/Chief Executive
Nigeria Deposit Insurance Corporation
Thursday October 19, 2023.