The Nigeria Deposit Insurance Corporation (NDIC) has stepped up its efforts to detect vulnerabilities in financial institutions early, in a bid to prevent problems from escalating into wider financial crises. According to the NDIC's Managing Director, Mr. Thompson Oludare Sunday, the corporation is positioning itself not merely as a payer of claims after bank failures but as a "risk minimizer" within the financial safety-net architecture. This move was disclosed at the NDIC Special Day at the 21st Abuja International Trade Fair.
The NDIC's supervisory activities involve examining banks' books, assessing the quality of their loan portfolios, and determining whether assets pledged as collateral can be realised when required. This approach is designed to identify weaknesses early and strengthen safeguards before institutional problems develop into broader crises. The corporation's Head of Communication and Public Affairs, Hawa Gambo, represented Sunday at the event. The NDIC's measures aim to enhance its institutional framework and collaboration with other financial institutions.
The NDIC has continued to strengthen its institutional framework through the deployment of Risk-Based Supervision, an enhanced Differential Premium Assessment System, and the Single Customer View Framework. Additionally, the corporation has implemented a distress resolution suite and the Bank Liquidation Management System. These measures are being complemented by stronger collaboration with the Central Bank of Nigeria (CBN) and other institutions within the financial safety-net architecture.
The NDIC's mandate of deposit guarantee, bank supervision in collaboration with the CBN, failure resolution, and bank liquidation remains critical to maintaining confidence in the banking system. In 2024, the corporation raised the maximum insured deposit limit to N5 million per depositor per Deposit Money Bank and Mobile Money Operator. The limit for Microfinance Banks, Primary Mortgage Banks, and Payment Service Banks was increased to N2 million.
The enhanced coverage provides full protection for more than 98 per cent of depositors across insured institutions, shielding households, small businesses, and other vulnerable depositors from the immediate effects of bank failures. For depositors with balances above the insured limits, the NDIC continues to pay liquidation dividends from recoveries arising from debts owed to failed institutions and the disposal of their physical assets.
The NDIC has transformed its reimbursement process through the use of technology, including the Bank Verification Number (BVN), Single Customer View, and NIBSS infrastructure. Verified depositors of failed banks can now receive their insured deposits within days of bank closure, compared with the previous cumbersome manual processes. This move aims to improve the efficiency and speed of the reimbursement process.
Despite these efforts, the NDIC has warned Nigerians against entrusting their savings to unlicensed and unregulated financial institutions. The corporation urges citizens to keep their money in licensed and regulated financial institutions, cautioning against unrealistic returns promised by some fund managers. By doing so, individuals can ensure the safety of their deposits and avoid potential financial losses.
Key points
- The NDIC has intensified efforts to identify vulnerabilities in financial institutions early to prevent wider financial crises.
- The corporation has strengthened its institutional framework through the deployment of Risk-Based Supervision and other measures.
- The NDIC has transformed its reimbursement process through the use of technology, enabling faster payouts to verified depositors of failed banks.
