NDIC: 30yrs of bank failure resolution
THE TWIN REGULATOR OF THE nation’s financial services, the Nigeria Deposit Insurance Corporation (NDIC), has evolved from the new baby it was several years to being a major force in the protection and stability of the financial industry...
THE TWIN RE GULATOR OF THE nation’s financial services, the Nigeria Deposit Insurance Corporation (NDIC), has evolved from the new baby it was several years to being a major force in the protection and stability of the financial industry. The bells are ringing as the corporation is set to mark its 30th anniversary.
Statutorily, the NDIC is saddled with the liquidation of failed banks, ensure prompt claims settlement, sale and management of failed banks’ assets, recoveries, among others. Till date, it has liquidated a total of 49 failed banks and has been paying owners of insured deposit what is statutorily due to them and dividends. It also pays dividend to uninsured depositors.
However, depositors with uninsured funds and other general creditors of a failed bank do not receive either immediate or full reimbursement, instead they are issued liquidator’s certificates. The certificate entitles its holder to a portion of the dividend declared by the liquidator from the failed bank’s assets. Other claimants of the failed bank such as other creditors and even shareholders receive their portion of the dividend declared by the liquidator from the failed bank’s assets after all depositors had been fully paid.
Given that all the failed banks’ licences had been revoked before the new NDIC 2006 Act, the deposit insurance coverage level applicable to the insured depositors was N50,000.00 per depositor per failed bank. The applicable coverage limit had since 2006 been increased to N200,000.00 per depositor per insured failed institution for the universal banks while it became N100,000.00 per depositor per insured primary mortgage institution (PMI) or microfinance bank (MFB) in order to ensure the adequacy of the coverage levels.
As at December 31, 2010, the corporation had paid a total of N7.597 billion insured deposits to insured depositors of the bank-in-liquidation.
With these enviable feats, NDIC, last Friday said it had recovered about N29.541 billion from debtors of liquidated Deposit Money Banks and from debtors of failed MFBs and Primary Mortgage Banks since 1994.
It also disclosed that during the period, it realized N21.502 billion from the disposal of physical assets of closed DMBs even as N404.74 billion and N78.17 million were also realised from MFBs and PMBs’ disposed assets.
Giving these hints at a media briefing to commemorate the 30th Anniversary of the corporation in Abuja, Ibrahim Umaru the managing director, said that in furtherance of its statutory roles the corporation had been working in collaboration with the CBN and other relevant institutions to ensure the stability of the nation’s financial system.
Represented by Sunday Oluyemi, the director, corporate communication and public affairs department, at the forum, the managing director, explained the corporation had paid N116.258 billion as liquidation dividends to depositors, creditors and shareholders of the closed DMBs, MFBs and PMBs.
He explained further: «It is important to stress that through sustained and diligent liquidation activities, NDIC has realized assets to pay in full, deposits of customers of 17 of the DMBs (in liquidation).
«In effect, all the depositors of the 17 defunct banks who came forward to file their claims have been paid all their monies (both insured and uninsured) erstwhile trapped in those banks», Umaru.
He reassured stakeholders in the nation’s banking system in particular and the economy in general of the corporation’s readiness «not only to sustain the high standard recorded, but to raise the bar in line with our core values of honesty, respect and fairness, discipline, professionalism, team work and passion.»
However, the NDIC act needs to be amended again to increase what each insured depositor can get in the event that his bank fails. For insured depositors who have substantial moneytrapped in failed banks, N200,000 is too small to assuage his loss.