NDIC, CBN get FG commendation for engendering resilient financial services sector

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3 years ago

The Federal Government has given a pass mark to the Nigeria Deposit Insurance Corporation (NDIC) and the Central Bank of Nigeria (CBN) for keeping the country’s economy resilient despite the turbulent economic headwinds.

It observed that Nigeria’s economy, like others, felt the brunt of the global economic distortions, having slipped into recession twice in the space of five years, pointing out that it was shielded by the resilience of the nation’s financial system, which made it came out from recession within months.

Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed gave the commendation Tuesday in Abuja at the 2022 International Association of Deposit Insurer (IADI) Africa Regional Committee workshop organised by Nigeria Deposit Insurance Corporation (NDIC) with the theme: ‘‘Normality in turbulent periods: the stabilising role of Deposit Insurance.”

The minister noted that in spite of the challenges that assailed the economy, no depositors’ fund was lost due to the effectiveness of financial sector regulatory agencies, most especially the CBN and the NDIC.

Speaking on the important role of the banking sector, she said, the sector remains pivotal in supporting the real sector through the provision of innovative products and services to all relevant stakeholders.

Mrs Ahmed however, said the fiduciary nature of banking business, coupled with increased social-economic challenges across the globe, had increased the risk of banks’ failure, with significant implications for depositors’ losses and erosion of public confidence in the banking system.

According to her, “The negative impact of these challenges on economic growth and financial sector stability in most economies of the World, raised a number of questions concerning the role of Deposit Insurance Scheme ( DIS) in contributing to financial system stability.

“It has equally demonstrated the important role played by the deposit insurance system, as a component of financial safety-net arrangements in most jurisdictions across the globe, given that, depositor protection is a critical element necessary for maintaining and restoring financial stability.

“The Nigerian economy, like others, felt the brunt of the global economic distortion, having to go into recession twice in the space of five years. However, given the resilience of the nation’s financial system, we came out within months. We also make bold to say that despite these economic challenges, no depositors’ fund was lost given the effectiveness of our agencies, most especially the CBN and the NDIC.”

Mrs Ahmed described the choice of the theme as apt, instructive and germane in the light of recent socio-economic challenges that continued to undermine the safety and stability of the financial system across the globe, accentuated by the lingering effects of the COVID-19 pandemic, Russian-Ukraine war, global supply disruptions and climate change challenges.

She noted that these posed myriads of challenges and risks to the safety and stability of the global financial system, and urged participants to discuss more specific issues thoroughly, such as Deposit Insurer’s role in contingency planning and crisis management, among others.

The Central Bank Governor, Godwin Emefiele in his goodwill message said the regulatory agencies in Nigeria’s banking sector have in place, proactive mechanisms to deal with systemic problems in the financial sector.

He added that the CBN and NDIC worked in synergy in developing policy guidelines for banking sector protection.

The NDIC Board Chairman, Mrs Ronke Sokefun in her remarks said the workshop was organised by the Corporation to serve as a forum to dissect pertinent issues, share experiences, compare notes and elevate participants’ understanding of “the role of deposit insurers in early detection & timely intervention; contingency planning & crisis management; crisis simulation to strengthen operational resilience, and contingency planning framework for a safer, and more resilient financial system that is supportive of sustainable economic growth in each jurisdiction.”

“The presence of global experts from both fiscal, monetary, supervisory and regulatory agencies, and deposit Insurers in a gathering like this, is a manifestation of our commitment towards having a robust and sustainable system that can detect problems early enough and manage crisis adequately in the banking system to foster financial system stability,” she said.

Managing Director and CEO of NDIC, Mr Bello Hassan, said NDIC provides deposit insurance protection to depositors of 33 Deposit Money Banks (DMBs) comprising 24 commercial banks, 6 Merchant Banks and 3 Non-Interest Banks (NIBs) and 882 Microfinance Banks (MFBs); 34 Primary Mortgage Banks (PMBs); 3 Payment Service Banks (PSBs), and 29 Mobile Money Schemes.

Hassan noted that the NDIC adopted different resolution mechanisms in resolving the failure of distressed deposit-taking financial institutions in the country.

“The liquidation activities of the NDIC involved 467 insured banks in liquidation, comprising 49 DMBs, 367 MFBs, and 51 PMBs, at end-December 2021.

“The successes recorded by the NDIC in the execution of its mandate, would not have been possible without the strong support and collaborative efforts of other financial safety-net players in Nigeria like the CBN, the Federal Ministry of Finance, Budget and National Planning and other members of the FSRCC,” he said.

Hassan reiterated that the NDIC is a member of the FSRCC, an inter-agency body set up to coordinate the supervision of financial institutions and deal with matters of common interest and concern to the various regulatory and supervisory authorities in the Nigerian financial services industry.

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