Access to accurate depositor’s information major setback to prompt reimbursement – NDIC
The Director of Director, Research, Policy & International Relations, Nigeria Deposit Insurance Corporation (NDIC), Dr. Kabir Katata has disclosed that One of the biggest constraints hindering prompt and accurate reimbursements is the lack of early access to accurate depositor
information.
He made the disclosure while presenting paper on ‘ Reimbursing Depositors Faster in Nigeria using single customers view; solution and Prospect at the ongoing NDIC FICAN workshop on Wednesday.
Dr. Katata said ” This includes access to depositor records in advance of a failure, poor quality of depositor records at banks, and the lack of a bank client unique identifiers to aggregate deposits held by the same person/entity so as to apply the deposit insurance coverage limits.
” Other key impediments to timely reimbursement include the difficulty in
determining depositors’ claims and related loans/liabilities for complying with netting requirements and the lack of appropriate IT reimbursement systems and reimbursement plans to deal with different sized banks.
According to him To expedite the reimbursement process, a DI should rely on technology-based systems to process depositor information in a systematic and accurate manner.
“Towards this end, one important reform that is being implemented in several
jurisdictions to expedite the reimbursement process is through develop a Single Customer View (SCV).
He suggested that we need to maintain public confidence in the stability of the financial system.
“If depositors are aware and have
confidence that they will be reimbursed promptly and accurately, they are less likely to withdraw their funds from the
banking system.
” Minimise the likelihood of contagion. Confidence in the financial system reduces the possibility that the failure of one bank will spread to other banks.
” Minimise disruption for depositors.
Prompt payment will enable depositors to meet their financial obligations and reduce the potentiality that problems in the banking sector will spread to other
sectors of the economy.
“Maintain the credibility of a deposit
insurance protection scheme.
Reimbursement delays to insured
depositors of failed banks may affect
the broader public confidence in both
the deposit insurance protection
scheme and, by extension, the
stability of the financial system.”
The Director noted that the NDIC has robust legal framework to reimburse depositors whenever the need arises.
Stressing that Since 1989, the NDIC has been involved in payouts to depositors of 467 insured banks inliquidation, comprising 49DMBs, 367 MFBs, and 51 PMBs.
He argued that the Corporation has strived to build effective processes and systems for meeting the deposit insurers’ obligation to make timely and accurate reimbursements to depositors.
“The NDIC developed a SCV platform deployed to IFIs to eliminate delays often
experienced in reimbursing depositors following revocation of failed IFIs licences by theCBN. This will be exposed to DMBs also to enhance prompt reimbursement of depositors
funds.
“The NDIC continues to collaborate with relevant stakeholders to improve its payout processes and systems.”
