The Nigeria Deposit Insurance Corporation said its prompt resolution of banks’ failure over the years saved the banking sector from systemic collapse.
Mrs. Ronke Shokefun, Chairman NDIC Board of Directors, said this at a retreat organised by NDIC for members of the House of Representatives Committee on Insurance and Actuarial Matters, on Thursday in Lagos.
The News Agency of Nigeria reports that the retreat had, “Strengthening Nigeria’s Financial Safety-Net: The Role of Deposit Insurance (DI)” as theme.
She said the prompt resolution of banks’ failure had also in the corporation’s 32 years of existence, further provided a Financial Safety-Net for the banking sector.
“Bank Resolution options applied so far by the NDIC have included Financial Assistance, Technical Assistance, Hold Action, Assisted Mergers and Acquisition, Purchase and Assumptions, as well as the application of the Bridge Bank Mechanisms.
“It is only when all these options could not rescue a bank that it is allowed to go into liquidation,” she said.
Shokefun said 49 Deposit Money Banks, 367 Microfinance Banks and 51 PMBs were either completely liquidated or undergoing the process of complete liquidation by the NDIC.
She said this followed the revocation of their operating licenses by the Central Bank of Nigeria.
The Managing Director of NDIC, Mr. Bello Hassan, said there were four key components of financial safety-net, which would aid financial stability at all times.
“Financial Safety-Net is a framework comprising four key components/functions of prudential Regulation and Supervision, Resolution, Deposit Insurance and Lender of Last Resort.
“The various components aim to promote financial stability at all times and manage eventualities of any financial crisis,” he said.
Darlington Nwokocha, Chairman, House of Representatives Committee on Insurance and Actuarial Matters, assured NDIC that the legislature would be used to strengthen Nigeria’s Financial Safety-Net.
“The Insurance Bill which is almost getting to the third reading will highly synergise what we are doing to a very great height.
“When we are talking about strengthening, there are too many indices and factors that must come together to guarantee such strengthening.
“I think that one of the core reasons the machinery to drive that process will come from the legislature and that is the more reason why we are saying that we are ever ready to strengthen the NDIC Act by amending that Act,” Nwokocha said.
One of the participants, Oghene Emmah Egoh, representing Amuwo Odofin Federal Constituency, Lagos State, urged the Corporation to ensure it properly regulated to new banks as the financial industry was rapidly growing.
“This topic will enable us to look at the financial industry and see how we can handle it by ensuring that the nation moves forward because if there is a crisis in the financial industry then this country is finished.
“But they will need to consolidate, they will need to expand and look at the new businesses that are coming up for instance, several new companies do money transfer using different apps and all these ones are part of the financial services,” he said.