The Nigerian Deposit Insurance Corporation (NDIC) has announced its commitment to enhancing partnerships with the judiciary to accelerate the prosecution of failed financial institutions. This announcement was made by the Managing Director, Bello Hassan, at the 19th Abuja International Trade Fair, which focused on mobility in transportation, trade finance, and taxation. Hassan emphasized that strengthening ties with the judiciary has already resulted in the resolution of long-standing legal cases and has enabled the NDIC to declare 100% liquidation dividends for uninsured depositors in over twenty banks that have closed. This initiative highlights the NDIC’s critical role in maintaining financial stability, as it ensures that depositors receive prompt compensation following bank failures, in accordance with the Banks and Other Financial Institutions Act of 2020 and the NDIC Act of 2023.
Concerns regarding bank failures have become increasingly pronounced among stakeholders, leading to calls for legal accountability for board directors who presided over collapsing banks. This public sentiment underscores the urgent need for stronger governance and oversight within the banking industry to avert future problems. Hassan assured customers that the NDIC is addressing the issue of impunity among bank board directors and has put in place measures to facilitate their prosecution, thereby enhancing financial stability within the sector. He reiterated that deposit insurance serves as a safety net, fostering confidence in the financial system, helping to build trust among depositors, and averting bank runs during uncertain periods.
In discussing the NDIC’s recent actions following the closure of Heritage Bank, Hassan provided an update on insured deposit payments. He revealed that the institution has successfully paid 84.98% of depositors linked to Bank Verification Numbers (BVNs). This prompt response came just four days after the bank’s closure, where the NDIC utilized the BVNs to identify alternate accounts and expedite compensation, allowing affected customers to receive insured amounts up to N5 million without the hassle of filling forms or visiting NDIC offices. The swift action and the recent increase in deposit insurance coverage from N500,000 to N5 million have substantially eased the financial distress experienced by depositors as a result of the bank’s failure.
Emeka Obegolu, the President of the Abuja Chamber of Commerce and Industry, praised the NDIC for its ongoing dedication to safeguarding depositors and promoting a stable banking environment, which is essential for economic growth and fostering trade and investment in Nigeria. His remarks, delivered by the chamber’s Director-General, Agaba-Idu Jideani, acknowledged the NDIC’s vital contribution to the country’s financial stability, emphasizing its role in fortifying the public’s confidence in the banking system and ensuring the overall soundness of the financial sector.
Obegolu further commended the NDIC for its foundational principles of trust, transparency, and financial prudence, which resonate with the Abuja Chamber of Commerce’s goals of cultivating a favorable business climate in Nigeria. The partnership between the NDIC and the chamber illustrates a collective effort towards reinforcing the nation’s economic architecture. He pointed out the crucial connection between a reliable financial system and the efficient movement of goods, services, and capital, which is integral for trade and investment.
As the fair embraced the theme of “Mobility: Options for Transport, Trade Finance, and Taxation,” the discussions highlighted the interdependence of financial stability and economic development. The NDIC’s focus on protecting depositors and fostering a resilient banking industry is indispensable for Nigeria’s economic progress. By ensuring that depositors are safeguarded, the NDIC contributes not just to the stability of the financial sector but also to the broader objectives of enabling seamless trade and investment, ultimately solidifying the groundwork for continued national development. Through its proactive measures and collaborative approach, the NDIC aims to bolster the public’s confidence in the banking sector, crucial for the country’s economic future.
