CBN, NDIC in Turf War over New Bill
Insurers reject bill to entrench new regulator
At yesterday’s public hearing organised by the Senate Committee on Banking, the Central Bank of Nigeria (CBN) and Nigeria Deposit Insurance Corporation (NDIC) engaged in a turf war over a renewed attempt by the Senate to repeal and reenact the NDIC Bill.
Tagged the NDIC Act 2006 (Repeal and Reenactment) Bill 2015, some of the amendment proposals seek to confer coordinating functions and powers on the NDIC.
However, this drew the ire of the CBN, which described the move as a ploy by the NDIC to usurp its powers.
Speaking at the hearing, Governor of CBN, Godwin Emefiele, who was represented by one of his deputies, Suleiman Barau, called for a total rejection of the proposals, saying they were capable of causing anarchy in the financial sector.
Emefiele further argued that NDIC, being an undertaker in the financial sector, lacked the locus to seek to be a judge and prosecutor in its own case, adding that by the amendments, NDIC was seeking to position itself as a parallel and coordinating regulator of banks like the CBN.
But the Managing Director of NDIC, Alhaji Umaru Ibrahim, countered that CBN’s statement was misplaced, insisting that NDIC was not seeking any new roles outside its lawful powers.
According to him, NDIC was only determined to ensure safety and soundness in the banking system, and that the agency was not competing with the CBN as erroneously conceived.
He further said NDIC was only prepared to ensure its operational independence and mandate as provided by its Act.
But Emefiele disagreed, stressing that the amendments would confer conflicting supervisory functions and powers on NDIC over banks and simultaneously create what he described as overlapping regulatory responsibilities for the NDIC.
He listed the powers being allegedly sought by the corporation to include: power to license banks; power to supervise banks without reference to the CBN; power to determine the licences of banks; as well as powers to appoint itself as liquidator.
He added: “It is pertinent to mention that all the above powers which the NDIC seeks to assume and exercise are ostensibly to ensure that it carries out its function as a risk minimiser and that depositors of distressed banks and other deposit-taking financial institutions are paid in good time to avoid delays.
“While the CBN supports the desire to pay depositors of distressed institutions in good time, the proposal to make NDIC the ‘judge and juror’ in cases involving banks is fraught with dangers and is a recipe for financial instability. It is indeed the ingredient for chaos and anarchy and is not practised in any financial system in the world.”
In his response, Ibrahim said: “Yes, we may have disagreements here and there. We are not reinventing the wheel. I noticed from the presentation of Mr. Barau that apparently he may not be aware of the fact that a lot of these have been resolved and will be resolved.
“We are for collaboration, we are for the safety and soundness of the system. We are not in competition with the CBN. At the same time, we cherish our own operational independence and we cherish our mandate as provided by our Act.
“I can assure you that by the time we go through the details, you will find that there are very few areas of misunderstanding or conflict that we need to resolve. There are very few new things that we have introduced and some of them have been read out.
“But a lot of the issues still remain valid in our rules and I keep saying that the founding fathers of NDIC, who decided that NDIC should operate as a risk minimiser, in other words, given full powers to be involved in supervision and bank examination and in the liquidation among others, did not do that by mistake.”
Also yesterday, stakeholders in the insurance industry rejected a bill seeking to establish the Nigerian Council of Registered Insurance Brokers (NCRIB) as the industry regulator.
The bill entitled, The Nigerian Council of Registered Insurance Brokers Act 2003 (repeal and reenactment) Bill 2015, was utterly rejected at a public hearing in the National Assembly.
Stakeholders unanimously kicked against the bill on the grounds that if passed into law, it would impede the growth of the insurance industry.
In his presentation, Chairman, Insurance Industry Law Review Committee and former President, Chartered Insurance Institute of Nigeria (CIIN), Joe Irukwu, reasoned that some aspects of the proposed bill were unconventional and hence would be detrimental to progress in the industry especially in the context of universal and settled principles of insurance regulation.
Irukwu further explained that the National Insurance Commission (NAICOM) had been empowered to supervise and regulate the insurance industry while the Nigerian Council of Registered Insurance Brokers was meant to promote the interest of members.