Nigeria Deposit Insurance Corporation dismisses, as misleading, media reports that it is seeking powers to liquidate insurance companies and terminate their licences
| By Anayo Ezugwu | Jul. 28, 2014 @ 01:00 GMT
THE Nigeria Deposit Insurance Corporation has denied media reports that it is seeking powers to liquidate insurance companies and terminate their licences. It said in a statement on Sunday, July 13, that as a deposit insurer, the liquidation of insurance companies did not fall under its purview.
The corporation was reacting to recent media reports that the Central Bank of Nigeria had rejected moves to empower the NDIC to liquidate insurance companies. The statement signed by H. S. Birchi, head, communication and public affairs, NDIC, stated that the erroneous publications were sequel to the public hearing by the House of Representatives Committee on Banking and Currency held on Tuesday, July 8.
“The corporation wishes to make it categorically clear that its proposed amendment bill, which is before the National Assembly, does not seek for powers to liquidate insurance companies or terminate the insurance firms’ licences as erroneously published in some national dailies,” he said.
The corporation was established in 1989 vide the NDIC Act of 1988 with powers, among others, to supervise insured institutions, resolve bank distress conditions and act as a liquidator of closed insured financial institutions whose licences have been revoked. These powers were not only retained by the NDIC Act, 2006, which replaced the NDIC Act of 1988, but also strengthened the organisation for greater effectiveness. The NDIC Act of 2006 had enabled the corporation to collaborate effectively with the CBN in resolving banking crises in the country, particularly the crisis of 2009.
According to Birchi, the emerging challenges after the crises as well as the experience garnered in the operation of deposit insurance in Nigeria in the past 25 years had necessitated a further review of the 2006 Act. The proposed amendments were, therefore, to enable the corporation to discharge its mandates effectively and efficiently.
“Accordingly, some of the amendments or new provisions being proposed are the prompt payment of insured deposits following the failure of an insured institution by reducing time of reimbursement (payment to depositors) from 90 days to 60 days; powers to deal with parties at fault such as directors and officers who cause the failure of an insured institution; and power to reimburse insured depositors notwithstanding pending court suits.
“Others are prevention of execution of judgement against the assets of the corporation (as body corporate) for a liability of a failed insured institution; limitation of court orders aimed at preventing the corporation from carrying out its statutory functions of deposit protection; enhancing corporate governance practices in the corporation; increase funding for the corporation to be able to carry out its core mandate of depositor protection; and to enhance debt recovery efforts by the corporation,” he said.