Senate, NDIC strengthen regulation to protect bank depositors

The Senate Committee on Banking, Insurance, and Other Financial Institutions has said the insurance coverage increment for commercial banks from N500,000 to N5 million by the Nigeria Deposit Insurance Corporation (NDIC) can improve the confidence of bank depositors in the country.

This was disclosed by the Chairman of the Senate Committee on Banking, Insurance and Other Financial Institutions, Senator Mukhail Abiru, at the Stakeholders’ Retreat of the committee with NDIC themed: “Building Resilient Financial Systems through Effective Legislative Interventions.”

This means that in the event of any bank failure, depositors with less than or equal to N5 million in their accounts as of the time of the liquidation will be immediately funded by the NDIC.

Abiru said capturing nearly 99 per cent of depositors, which the increase in the insurance coverage represents, has shown the commitment of the NDIC “to adapting to the changing economic landscape and ensuring that the interests of small depositors, in particular, are fully protected.”

The Senators also commended the NDIC for its role in resolving the issues surrounding the failed Heritage Bank, saying settling depositors is never easy as the corporation has almost completed payment to the depositors.

Abiru said the dedication “to resolving this matter demonstrates the high standard of operational efficiency that we, as stakeholders, have come to expect from the NDIC.

“Nevertheless, I urge the Corporation to ensure that maximum value is realised from the bank’s remaining assets, which will ultimately contribute to the settlement of outstanding depositors and other creditors,” he said.

The senator stated that as the financial system changes, the legislative frameworks must evolve equally, especially in the face of cybercrime threats.

“We must prioritise robust cyber security framework,” he said, adding “Collaboration and partnership would keep the nation’s financial system resilient.”

The NDIC boss in his welcome remark stated that building a resilient financial system requires trust and confidence.

He stated that the coverage review was done “to promote depositor confidence, mobilise savings and financial inclusion as important conditions for a stable banking system.”

He stated that the financial services sector has experienced significant transformation, largely driven by advances in technology, globalisation and consolidation.

In the face of the change, he said stakeholders must “be conscious of the additional risks and complexities that the system may be further exposed to.

“To address this concern, stakeholders, particularly charged with oversight functions, must collaborate more than ever before. In this collaborative effort, the legislature must be consciously determined to redesign the legal framework that will support the current financial advancement while promoting innovation and consumer protection,” he added.