The World Bank has commended Nigeria Deposit Insurance Corporation (NDIC) for its robust Target Fund Ratio Framework which enables the Corporation to meet its obligation to depositors.
Headed by Mr Julian Casal, the World Bank technical team gave the commendation at the end of its 4-day working visit to the NDIC for a formal presentation of the Target Fund Ratio Framework and capacity building to staff of the Corporation.
Mr Julian Casal said that the NDIC’s Target Fund Ratio Framework was suitable in determining the adequacy of the Corporation’s deposit insurance fund (DIF); adding that the framework was a ‘model’ and expressed their intention to adopt the document as a benchmark for other African deposit insurance Corporations.
Responding, the NDIC’s Managing Director and Chief Executive, Alh. Umaru Ibrahim expressed appreciation to the World Bank for its continuous support towards the Corporation’s capacity building initiative and effective discharge of its mandate.
Before concluding its assignment, the World Bank team, comprising Messrs Julian Casal, Jan Philipp Nolte and John O’Keefe interacted with the NDIC staff from relevant departments with a view to clarifying the data and other issues considered in establishing the target fund ratio framework. They also interacted with other stakeholders in the banking sector, including officials of the Central Bank of Nigeria (CBN) and Asset Management Corporation of Nigeria (AMCON) on issues relating to banking supervision and distress resolution.
The Target Fund Ratio is the ratio of fund that determines the optimal fund level that enables a deposit insurer to effectively meet its obligation to depositors. Under the International Association of Deposit Insurers (IADI) Core Principle 11 for Effective Deposit Insurance System, “the Fund Reserve Ratio should be based on clear, consistent and well developed criteria”.
The development of the Target Fund Ratio by the Corporation was premised on the recommendation at the end of an IADI international workshop on the “Methodology for Assessing Compliance with the IADI Core Principles for effective deposit insurance system which was hosted by the Corporation in 2011. The Corporation was advised to comply with some Core Principles, among which was Core Principle 11 on funding. Consequently, the Corporation approached the World Bank for technical assistance towards the development of the Target Fund Ratio and the request was granted in 2014 under the World Bank Financial Sector Reform and Strengthening (FIRST) Initiative.
HADI SULE BIRCHI
HEAD, COMMUNICATION & PUBLIC AFFAIRS
WEDNESDAY 8TH JULY, 2015