The Nigeria Deposit Insurance Corporation (NDIC) has explained how financial institutions, especially commercial banks, surmounted the economic disaster brought about by the emergence of the COVID-19 pandemic.
According to the insurance company, it takes a resilient financial system to avoid a series of shortcomings.
The NDIC Managing Director/Chief Executive, Bello Hassan who spoke during stakeholders meeting with the Senate Committee on Banking, Insurance & Other Financial Institutions, said the banks surmounted the economic disaster due to the proactive policies and support of the regulatory authorities.
Hassan further said that the financial institutions were deliberate in their operations, especially in the discharge of the mandates of deposit guarantee, bank supervision, distress resolution and bank liquidation.
“A resilient financial system has the capacity to respond to a range of shocks. The macroeconomic shock and stress brought about by COVID-19 are unprecedented. It has been recognised as the ultimate test of resilience so far to financial systems,” the NDIC Director-General noted.
The financial expert admonished prudent risk management practices in the insured institutions because effective risk management remained central to a safe and sound banking system.
He said a measure taken to strengthen the deposit insurance system in Nigeria was the migration to the Differential Premium Assessment System from the flat-rate method of assessing and collecting premiums, with a view to aligning the pricing of deposit insurance to the risk profile of individual banks and the collaboration with the CBN.
This, he said, was to shift from compliance-based examination to risk-based supervision.
The Chairman, Senate Committee on Banking, Insurance & Other Financial Institutions, Senator Uba Sani, said the committee, in its efforts towards regularly engaging critical stakeholders in the financial and banking sectors, jointly organises retreats of this nature for discussions and painstaking analysis on a wide range of issues whose outcome would be of great benefit to the sectors and the Nigerian economy at large.
Represented by Olubunmi Adetunmbi, Uba said, “Furthermore, this retreat is yet another indication and demonstration of the progress we have all made in forging a solid, sustainable and workable relationship in the overall interest of the nation.”