*CBN Opposes NDIC’s Bid for Greater Independence in Deposit Insurance
*NDIC Seeks to Strengthen Its Role as Liquidator, Faces Opposition from CBN
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Operators in the banking and insurance sectors of the economy on Thursday held divergent views on the bill seeking for amendment of the Nigeria Deposit Insurance Corporation (NDIC) Act, 2023.
The bill, which was sponsored by the Chairman, Senate Committee on Banking, Insurance and Other Financial Institutions, Sen. Adetokunbo Abiru, sought to strengthen the independence and efficiency of the corporation.
The bill proposed amendments to sections 2, 3 and 4 of the principal Act, replacing the word “collaboration” for the word “concurrence.”
However, during a public hearing organised by the committee at the Senate, stakeholders disagreed over some of the proposed amendments.
The most contentious proposal was the removal of the “Concurrence” role for the Central bank of Nigeria (CBN) and substituting it with a rather “collaborative” role in a bid to make the NDIC more independent in taking decisions bearing on its policy objectives.
While the Managing Director of the NDIC, Bello Hassan, a former Chairman of NDIC Board, Mrs Ronke Sokefun, and the Bank Directors Association of Nigeria, threw their weight behind the provision, the CBN opposed it.
The NDIC’s MD insisted that the provision would strengthen the corporation, while Sokefun argued that it would restore the traditional role of the NDIC usurped by the CBN.
She stated, “We thank the Senate for taking a look at the traditional role of the corporation, which is to act as the liquidator in the event of a bank’s winding up.
“From the traditional role which the corporation has always executed, was all of a sudden, made to be at the whims and caprice of the CBN by deciding another liquidator.
The Chairman of the Bank Directors Association of Nigeria, Mustafa Chike-Obi, supported the proposed removal of the CBN’s concurrence requirement in Section 32 of the bill.
He noted “The proposed amendment aligns with the NDIC’s mandate to independently regulate insured deposit liabilities.”
CBN’s Acting Director, Financial Policy and Regulation, Mr John Onoja, who spoke for the apex bank, said collaboration implied that the NDIC would take the decisions and not in collaboration with the CBN.
The Financial Services Regulation Coordinating Committee (FSRCC), in its memoranda to the Senate Committee, also protested against proposed amendment to section 16 of the Act, increasing the capital base of the NDIC from N50billion to N500bn to be subscribed and held only by the Federal Government.
He said, “Increasing authorised share capital from N50billion to N500 billion and fully owned by the federal government renders the additional capital redundant as it would not be yielding the required return on investment.
“The extant share capital structure should be between the Ministry of Finance and CBN as sustained in the principal Act.”
The Legal Director at the Securities and Exchange Commission (SEC), Nestok Ikeagu, also objected to the amendment removing the SEC Director-General from the NDIC board.
He told the session that SEC’s role in investor protection justified its position on the board, noting that removing it would hinder interagency collaboration.
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