Fear not; your deposits are safe, NDIC reassures

By Clara Nwachukwu

The Nigeria Deposit Insurance Corporation (NDIC) has reassured depositors of the safety of their monies in banks even in the event of a failure, in line with its mandate to minimise risks.

The Director, Research Policy and International Relations Department of NDIC, Dr Kabiru Katata, gave the assurance yesterday at the 2022 workshop for financial journalists in Port Harcourt, Rivers State.

In a lecture titled: “The Role of the Nigeria Deposit Insurance Corporation (NDIC): Beyond Deposit Insurance,” Katata said the Deposit Insurer, in collaboration with the CBN, carries out efficient and cost effective resolution of distressed banks to promote public confidence and protect depositors.

“Effective resolution of failing banks is carried out to enhance the safety, soundness and stability of the banking system,” he added.

He listed some of the mechanisms that have been used to include open bank assistance, depositor reimbursement; Purchase & amp; assumption; and bridge bank.

Accordingly, Katata said: “In an unlikely event where it is true, it will be announced and be assured that 99.9% of your deposits are safe,” adding that rumours of distress in the financial services sector should be ignored.

He also reiterated the public policy objectives of the Corporation to include protecting small depositors in the event of a bank failure; contribute to financial system and macroeconomic stability, and to provide formal mechanism for failure resolution.

He further noted that because banks can fail and do fail, many countries including Nigeria, have put in place an explicit deposit insurance system (DIS), being administered by the NDIC, as part of safety-net arrangements, which he described as “strong”.

He said the Corporation also conducts cyber-security examinations in conjunction with the CBN to review the adequacy of information technology controls put in place by banks.

Katata explained that these measures are being taken to boost financial inclusion, saying that no country can achieve development or effectively eradicate poverty without the majority being involved in the financial system.

“The NDIC has been collaborating with the Central Bank of Nigeria (CBN) in various capacities in ensuring an improved financial inclusion.”

Because banks can fail and do fail, many countries including Nigeria, have put in place an explicit deposit insurance system (DIS), being administered by the NDIC, as part of safety-net arrangements.

Other activities

Besides its Core Mandate, Katata said the Corporation continues to engage in other activities with direct and indirect impact on actualising its objectives.

These include promotion of financial inclusion and consumer education, consumer protection, strengthening cyber security, protection of subscribers of mobile money operators (MMOs), encouragement of support of banking practice and education, assisting in the promulgation of banking laws, guidelines and regulations etc.

“This is to further ensure a robust DIS that continues to play great roles in depositor protection, safety and soundness of member institutions and complementing other safety net players in ensuring an enduring sound financial system in an economy.”

To this end, he said: “The Corporation welcomes complaints by bank customers seeking redress against untoward or unfair treatment by banks.

“This is in its bid to promote fair treatment of depositors, disclosure and transparency, and responsible business conduct.”

The NDIC also established 24-hours help desk services to attend to the requests of various stakeholders.

He however said achieving the Corporation’s mandate are not without challenges, relating to legal challenges to revocation and liquidation activities; non-amendment of relevant sections of the NDIC Act that further empowers it as a liquidator and other DIS activities; as well as lack of public awareness of the deposit insurance system.

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