From Uche Usim, Ibadan
The Nigeria Deposit Insurance Corporation (NDIC) is evolving strategies, including cementing closer collaboration of relevant stakeholders like the media and civil society organisations, to ensure swift resolutions in the event the Central Bank of Nigeria (CBN) revokes the licence of a distressed and insured financial institution.
NDIC Managing Director Mr Bello Hassan stated this in Ibadan on Wednesday in his opening remarks at the 18th Finance Correspondents Association of Nigeria (FICAN) workshop sponsored by the Corporation with the theme: “Enduring Extreme Disruptions: Resilience & Reinvention for Banking System Stability & Deposit Insurance”.
According to him, the need to close ranks with its partners is driven by the need to hurriedly dismantle some of the obstacles bedevilling the efficient and timely resolutions of liquidated institutions; such as slow recovery and realisation of assets, as well as litigation by erstwhile shareholders and creditors of closed banks. He said such an impasse can only be addressed through effective collaboration.
‘Our key focus is, therefore, to scale up the deposit insurance framework; provide timely support to insured institutions as and when required; ensure faster and orderly resolutions of liquidated insured institutions; as well as continue to assist the Central Bank in promoting the stability of the banking system.
‘In the area of deposit insurance, as a key mandate of the Corporation, we have evolved a strategy which accentuates our existing framework. The initiative strives to ensure that the insurance cover is adequate to support this objective within the banking sector. In addition, considering the importance of the optimum funding ratio in deposit insurance, we are developing an effective methodology for determining a realistic Target Funding Ratio for the Corporation.
‘Additionally, we have commenced the review of our approach to the determination of premium by banks to make it more risk-based, such that, the probability of the risk crystallising, becomes a major factor in the pricing methodology of our premium going forward.
‘Furthermore, there have been recent calls on the Corporation to enhance the provision of support to insured institutions that are facing financial difficulties. To this end, we have identified the need to reconsider our framework, to provide realistic terms and conditions that will enable qualifying insured financial institutions to promptly access technical and or financial support, in line with S.(2)(1)(b) of the NDIC Act, whilst also protecting the Corporation from possible downside risks,’ he explained.
Hassan described the workshop as an important part of the Corporation’s capacity building initiative for the media, towards ensuring their better understanding of their role in ensuring financial system stability.
‘It is also aimed at strengthening and broadening their ability to interrogate and interpret current developments in the financial services sector in general. I am extremely delighted that in the 19 years of this laudable engagement, the objectives of the workshop are continuously being met, judging by the knowledge imparted on participants, as demonstrated by the high quality of reportage that we read in the media on a daily basis,’ he added.