HOW NDIC RESTORED NIGERIANS’ HOPE IN BANKS
By Adediran Olufemi
NDIC in the last 30 years has recorded giant strides in the Nigeria’s economy, the Corporation has restored the faith of Nigerians in banks in the country.
The Corporation has helped Nigerian banks find their feet even in the midst of harsh economic conditions.
In NDIC, it has been three decades of resilient hard work and continuous innovations to achieve its goal of becoming the best Deposit Insurer in the world by the year 2020.
The Corporation has become a reference point in the implementation of the DIS in Africa and beyond.
It is an undeniable fact that the Corporation has continued to contribute significantly to the safety and stability of the nation’s financial system and has been recognised as a symbol of excellence in service delivery and industry standards.
In the face of increased sophistication of cybercrime and the proliferation of Ponzi schemes, the NDIC has played a distinct role as a critical member of the Nigerian financial safety net with distinction.
NDIC has saved the Nigerian Banking system from total collapse. Many Nigerians can now sleep with their two eyes closed with their money in banks knowing fully well that NDIC is there to protect them.
The sad tales of Nigerians losing their hard earned money in banks as a result of liquidation is now a thing of the past, not only this, the Corporation has saved Nigerian economy
The NDIC has become the best Bank deposit Insurance Corporation in the entire African continent, the Corporation is now a hub for the provision of capacity building for other sister agencies across Africa.
The Corporation has played hosts to delegates from Kenya and Uganda who came to tap from the well of experience of NDIC, with more participants being expected from all over Africa in the coming months.
NDIC has zero for corruption as it has been blocking the leakages in the banking sector.
The corporation was established as a member of the Nigerian financial safety-net, with the broad public policy objectives of protecting bank depositors and promoting public confidence in the entire financial system. Both objectives are consistent with the NDIC’s core mandates of Deposit Guarantee, Bank Supervision, Distress Resolution, and Bank Liquidation.
The NDIC also ensure the sustainability of a sound, safe and stable financial system which is the essential pillar for sustainable economic growth.
This, the Corporation does by protecting depositors and guaranteeing their deposits in the unlikely event of bank failure.
It also conducts risk based supervision of the banks in collaboration with the Central Bank of Nigeria (CBN) and ensures the timely resolution of distressed banks, including their orderly liquidation as a last resort.
With respect to its deposit guarantee mandate, the Corporation reimburses depositors of Deposit Money Banks (DMBs), Non-Interest Banks (NIBs) and Primary Mortgage Banks (PMBs) up to a maximum limit of N500,000.00 each, while depositors of Microfinance Bank (MFBs) are reimbursed up to N200,000.00 each.
The Corporation is also responsible for the prosecution of corrupt bank officials who are found culpable of contributing to the eventual failure of a bank.
ACHIEVEMENTS OF NDIC
Undoubtedly, NDIC, in the last 30 years had served as the hope of the common man. Presently, the corporation’s insured limits cover more than ninety-seven per cent of depositors in the entire banking system in Nigeria. The remaining three percent with excess uninsured limits are paid their balances from the proceeds of the liquidation processes after the resolution of financial institutions.
Perhaps, one of the greatest achievements of NDIC is the establishment of the NDIC Academy in the Federal Capital Territory (FCT), Abuja in June 2013 to build a highly skilled human resource to deliver the Corporation’s mandate. The Academy, was accredited as a training hub for the Banking industry by the Council of the Chartered Institute of Bankers of Nigeria (CIBN). There are plans by the Corporation to develop it into a Centre for the Studies of Deposit Insurance in Africa for the benefit of other countries.
According to the Managing Director/Chief Executive Officer (MD/CEO) of NDIC, Umaru Ibrahim, “as at December 2017, the Corporation’s N500,000.00 maximum insured limit covered 96,760,687 accounts which represented 97.63 per cent of the entire accounts in the banking system.”
Umaru added that, the NDIC has also extended Deposit Insurance coverage to depositors of Non-interest Banking Institutions (NIBIs) and subscribers of Mobile Money Operators (MMOs) to the maximum limit of ₦500,000.00 through the Pass-Through Deposit Insurance Scheme (PTDIS) and Non-Interest Deposit Insurance Scheme (NIDIS) respectively.
In the proactive management of responding to emerging challenges in the financial system, Umaru said, “the NDIC continues to be at the forefront of driving the key objectives of the National Financial Inclusion Strategy (NFIS) to reduce the percentage of adult Nigerians that do not have access to financial services from 46.3 per cent in 2010 to 20.0 per cent in 2020.”
To this end, the MD/CEO said, the Corporation has redoubled its efforts at enhancing financial literacy to equip more Nigerians with the requisite knowledge required to make informed financial decisions in their engagement with various financial institutions.
His words, “In 2018, a total of 4,083 Nigerians benefitted from such programs through our participation in the Kaduna, Enugu, Lagos and Kano International Trade Fairs. Similarly, over 3,260 students of secondary schools across the country were mentored in the habit of savings through our participation in the 2017 and 2018 Financial Literacy Day programs while a total of 841 students were hosted on academic visits to our Head Office in Abuja.”
He recalled that, in the last quarter of 2018, the NDIC efficiently managed the resolution of the defunct Skye Bank with the establishment of the Polaris Bank. The Corporation has also taken measures to ensure that all those who contributed to the failure of the bank are prosecuted through the appropriate legal means to serve as a deterrent to others.
In February 2019, a Lagos Federal High Court sentenced the Managing Director of the failed Integrated Microfinance Bank (IMFB) Plc. Mr. Simon Ademola Akinteye to 32 years imprisonment over frauds that led to the failure of the banks.
The Corporation has also been relentless in its debt recovery efforts particularly the debts owed to banks in-liquidation so as to enhance payment of liquidation dividends to depositors whose balances are in excess of the insured limits.
According to him, “In 2018, a total of ₦526,397,116.26 from respect of Deposit Money Banks in-liquidation, ₦51,159,867.97 and ₦710,057.83 from Primary Mortgage Banks and Micro Finance Banks respectively. The cumulative recovery from debtors of Deposit Money Banks, Micro Finance Banks and Primary Mortgage Banks as at December 31, 2018 stood at N29.01 billion, N125.84 million and N290.43 million respectively.”
“These efforts were boosted by series of judgments obtained against banks in-liquidation and realization of physical assets of closed banks. Apart from the conviction of the MD of the defunct Integrated MFB, the Corporation also secured a landmark judgment against the First Bank of Nigeria Plc. to the tune of N556,493,034.16 in favour of depositors of Lead Merchant Bank Limited (in-liquidation)”, he added.
The Corporation won the award for the best performing Ministerial SERVICOM Unit (MSU) in the country in 2017.
Similarly in 2018, the Corporation received International Standard Organisation (ISO) certifications in Information Security, Business Continuity and Information Technology Management from the British Standards Institute (BSI). The Corporation is the first government agency in Nigeria to be certified on all the three (3) Standards.
And in 2019, NDIC won the Best Performing MDA award by the SERVICOM Office in the Presidency for its strict compliance with SERVICOM standards and excellence in service delivery.
NDIC: 30 YEARS IN RETROSPECT
Going down memory lane, Umaru said, “In the first decade of its existence, the NDIC was saddled with the onerous responsibility of managing distress in the banking system. It adopted multiple distress resolution options including provision of financial assistance to deserving institutions, imposition of holding actions, change of management of affected banks, and assisted mergers. It also became necessary to undertake the orderly liquidation of 33 banks whose licenses were revoked by the CBN. The Corporation also implemented the Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Act 1994, which established Failed Banks Tribunals to prosecute those who were responsible for the failure of the banks.”
“The second decade in the corporation’s evolution was defined by its responses to the regulatory challenges of bank consolidation policy of 2005. The Corporation adopted the Purchase and Assumption (P&A) system to resolve the problems of 13 banks whose licenses were revoked for failing to meet the N25 billion capital requirement.”
“The NDIC Act was amended in 2006 to strengthen the Corporation’s powers so as to execute its mandate more effectively. However some challenges experienced since 2006 have necessitated the need to review the NDIC Act by the National Assembly.”
“The Corporation introduced significant reforms during the period, such as Enterprise Risk Management, Differential Premium Assessment Systems (DPAS), built capacity of staff in Risk Based Supervision (RBS) and deployed a new performance management system. The Corporation also extended DIS coverage to Microfinance Banks (MFBs) and Primary Mortgage Banks (PMBs). It also reviewed the maximum coverage for different categories of deposit taking financial institutions.”
“The last 10 years of the Corporation was characterised by accelerated institutional growth, robust collaboration with strategic partners in the financial safety net and renewed drive for financial literacy.”
“To assist in the promotion of the financial inclusion initiative of the CBN, the NDIC introduced the Framework for a Pass-through Deposit Insurance scheme to enhance confidence, safety and stability in the mobile payment system. The scheme caters for the Mobile Money depositors.”
“In the year 2011, the Corporation established three (3) Bridge Banks to take-over the assets and assume the liabilities of the three (3) failed banks, namely Afribank, Bank PHB and Spring Bank. Polaris Bank was also established in 2018 as a Bridge Bank following the liquidation of Skye Bank.”
NDIC IN YEAR 2020
The Corporation ended 2019 on an impressive note but it is not resting on its oars. The NDIC is poised to improve and consolidate on its past achievements, starting with providing Nigerians with better services.
Umaru in his new year message, stressed that 2020 would be a defining year for the Corporation “because of its importance to our strategic vision”.
He hinted that the Corporation aimed to emerge the best Deposit Insurer’s in the world in year 2020.
Umarau said, “It is the year we collectively earmarked to emerge as one of the best Deposit Insurer’s in the world.”
“We cannot afford to rest on our oars. We have an obligation to re-dedicate our efforts with renewed energy and enthusiasm towards achieving the core mandates of Deposit Guarantee, Bank Supervision, Distress Resolution and Liquidation”, he affirmed.