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Lawmakers To Amend NDIC Act To Give More Protection To Depositors

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Senate Committee On Banking Looks Into NDIC Act

The Senate Committee on Banking, Insurance and Other Financial Institutions has expressed commitment for the accelerated amendment of the Nigeria Deposit Insurance Corporation (NDIC) Act.

Sen. Rafiu Ibrahim, Chairman of the committee, who disclosed this, said the purpose is to eliminate the gaps that have hindered the benefits of implementing the Deposit Insurance System (DIS) in Nigeria.

Ibrahim stated this Tuesday in Abuja, when he led his team to pay an oversight visit to the corporation.

Welcoming the team, the MD/CEO of the corporation Umaru Ibrahim, updated the committee on the recent activities of the corporation including the response of NDIC to the revocation of the licences of 153 Micro-Finance Banks (MFBs) and six Primary Mortgage Banks (PMBs) by the Central Bank of Nigeria (CBN).

Members of the committee were informed that the corporation had already commenced the payment of depositors of 25 MFBs and the deposits verification of 50 others.

Ibrahim listed the challenges encountered by FMBs in particular to include non-performing loans, insider credit and abuse, non-compliance with extant regulations on their establishment and the overbearing indulgence in other fringe operations, along with poor earnings.

The NDIC boss used the opportunity to inform members of the committee of the strong resolve and commitment of the corporation to assist in the investigation and prosecution of all those who contributed to the collapse of the defunct Skye Bank.

On the issue of the long suffering depositors of Savanah Bank, Fortis MFB, Aso Savings and Union Homes, the MD/CEO said that unless the enabling Act of the corporation is speedily amended, the corporation is handicapped in acting to end the plight of depositors of the institutions.

Using the case of Savanah Bank as an example, he added that the NDIC Act, as presently enacted, inhibits the corporation from reimbursing depositors since their bank licences were yet to be revoked due to protracted litigation.

The NDIC boss thereafter appealed to the committee to amend the NDIC Act.

Responding, the Chairman of the committee commended the corporation for the excellent quality of its reports on the supervision of banks, which have become the benchmark in the industry.

He however, expressed concerns over the recent policy of CBN, which raised the minimum capital requirements for MFBs in Nigeria from N20 million to N200 million, and N100 million to NI billion, and N2 billion to N5 billion for unit, state, and national MFBs respectively, adding that the policy will be inimical to the objectives of the financial inclusion strategy.

The meeting ended with both institutions pledging to work harmoniously to confront emerging issues in the industry such as block-chain technology, financial inclusion, cyber crime, digital banking, consumer protection and the provision of credits to MSMEs.



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