In a significant move to enhance depositor confidence and fortify the resilience of Nigeria’s banking system, the Nigeria Deposit Insurance Corporation (NDIC) has announced an upward revision of maximum deposit insurance coverage levels.
This was in a welcome address by Mr. Bello Hassan, Managing Director and Chief Executive of the NDIC, at a sensitisation seminar for Honourable Justices of the Court of Appeal in Lagos themed ‘’Building Strong Depositor Confidence in Banks and Other Financial Institutions through Adjudication of Disputes’.
Approved by the corporation’s Interim Management Committee (IMC) in April 2024, the revisions aim to provide greater protection to depositors across various financial institutions.
Under the revised coverage, the maximum deposit insurance for Deposit Money Banks (DMBs) and subscribers of Mobile Money Operators (MMOs) has been increased from N500,000 to N5,000,000.
Similarly, Payment Service Banks (PSBs) and Primary Mortgage Banks (PMBs) will now offer coverage up to N2,000,000, up from the previous N500,000. Microfinance Banks (MFBs) have also seen an increase from N200,000 to N2,000,000 in deposit insurance coverage.
The upward adjustment reflects the NDIC’s unwavering commitment to promoting depositor confidence and ensuring the safety of funds within the Nigerian banking system. By expanding the coverage limits, the corporation aims to reassure depositors and bolster trust in financial institutions nationwide.
Mr. Hassan reiterated the corporation’s dedication to fostering collaboration with the judiciary. He emphasised the importance of a streamlined legal framework, proposing the establishment of a Practice Direction for the Court of Appeal on matters related to failed banks. Such a directive, he argued, would expedite the resolution of appeal cases and facilitate the prosecution of parties responsible for bank failures.
He expressed gratitude to the paper presenters and discussants for their invaluable contributions to the seminar. He underscored the importance of collective efforts in building robust depositor confidence and ensuring the continuous safety and soundness of Nigeria’s financial system.
Apart from working to enhance the trust of depositors in the nation’s financial institutions, the revision in deposit insurance coverage levels, coupled with ongoing initiatives to strengthen collaboration with the judiciary, signifies a proactive approach by the corporation in safeguarding the interests of depositors and fortifying the stability of Nigeria’s banking sector.
Mr. Hassan underscored the crucial role of the judiciary in collaboratively ensuring the stability of Nigeria’s financial landscape. He emphasised that while banking operates as a commercial enterprise, it distinguishes itself by primarily functioning with depositors’ funds, thus necessitating rigorous regulation and supervision.
“The mandates of the corporation,” Mr. Hassan elaborated, “span deposit guarantee, bank supervision, failure resolution, and liquidation, all aimed at enhancing confidence in the financial system and contributing to its stability.”
Highlighting the complexity of legal issues surrounding deposit insurance, Mr. Hassan expressed confidence that the profound understanding of these intricacies among the Justices would expedite the resolution of banking distress cases. He stressed that their adjudications would not only set precedents but also significantly contribute to the evolution of bank insolvency law and practice in Nigeria.
The seminar provided a platform for robust discussions on safeguarding depositors’ interests, fostering judicial precedents, and ultimately fortifying the Nigerian financial sector against systemic risks.
As the event, attendees reinforced commitment to upholding the integrity and resilience of Nigeria’s banking system under the stewardship of the NDIC.
In a concerted effort to reinforce the integrity of Nigeria’s financial ecosystem, the NDIC used the event to bring together Justices of the Court of Appeal to deepen their understanding of the Deposit Insurance System (DIS) and its crucial role in ensuring financial stability.
Mr. Hassan acknowledged the indispensable role of the judiciary in interpreting laws and adjudicating on matters essential to the nation’s financial landscape. He stressed the need for a robust collaboration between the NDIC and the judiciary, emphasising that the effectiveness of the DIS hinges on a comprehensive understanding of the corporation’s unique responsibilities.
Mr. Hassan expressed gratitude to the President and all the Justices of the Court of Appeal for their attendance, citing their commitment to ensuring the safety and soundness of the nation’s banking sector.
He highlighted the tangible benefits derived from previous iterations of the seminar, including a reduction in liquidation-related litigations and a clearer distinction between the roles of the NDIC as a corporate body and as a liquidator of failed banks.
The seminar also provided a platform for in-depth discussions on key provisions of the Failed Banks (Recovery of Debts and Financial Malpractices in Banks) Act 1994, crucial for the recovery of debts owed by failed banks. Participants engaged in rigorous deliberations, facilitated by senior members of the bar serving as paper presenters and discussants.
By fostering a deeper understanding of deposit insurance and related legal frameworks, the NDIC aims to streamline the resolution of banking distress cases and minimise disruptions to the financial system.
