The Senate Committee on Banking, Insurance & Other Financial Institution has expressed readiness to support the Nigerian Deposit Insurance Corporation (NDIC) in bringing about more stability into the banking sector as a means of boosting the Nigerian economy.
Speaking at the roundtable meeting organized by the NDIC, the Chairman of the Committee, Sen. Uba Sani revealed that “a solid banking sector will boost our economic recovery efforts and help address our developmental challenges.”
“The National Assembly and NDIC are key institutions critical to the growth and development of the Nigerian economy. While we provide the legal and institutional frameworks, NDIC carries out its regulatory or supervisory responsibilities in order to safeguard the banking sector.
“Bringing stakeholders together to brainstorm on how well we have fared in carrying out our mandate is the best way of breathing life into our operations and repositioning the US for efficient service delivery.
“Our gathering here today is very important and strategic. Ideas generated here will help strengthen the financial sector, particularly the supervisory capacity of Nigeria Deposit Insurance Corporation,” he stated.
On his part, the Managing Director of NDIC, Mr Bello Hassan said “government is keen to provide confidence in the financial system by putting in place financial safety net to promote financial system stability and support economic growth and development.
“Deposit insurance system is an important component of the financial safety net in addition to prudential regulation/supervision and a lender of last resort function of the Central Bank of Nigeria (CBN).
“The main objective of the deposit insurance system is to compensate depositors in the event of banks failing to fulfil their obligations. The mechanism is an important means to gain public confidence in the banking system and achieve financial and banking system stability, which is one of the most important elements of economic growth and development, especially in a developing economy like ours.”
Bello explained that “deposit insurance aims to achieve two main goals. The first goal is to ensure that depositors will not lose their deposits held in insured banks if they become insolvent and subsequently fail. The second goal is to contribute to the stability of the financial system by engendering public confidence in the banking system.
“Banks can only effectively perform their role in the economy when they are healthy, safe and sound, and as such expected to be highly liquid, adequately capitalized, with high-quality assets and robust risk management systems at all times.
“This is why the banking sector is exceptionally important for more rigorous regulation than any other sector in the economy.
“Regulators through prudential guidelines, set ratios or thresholds to control, monitor and gauge the performance of banks with a view to ensuring safety and soundness. The determination of compliance and performance is done through On-Site Examination and Off-Site surveillance which are the focus of discussion in this special retreat.”
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