The Central Bank of Nigeria and the Nigeria Deposit Insurance Corporation, NDIC, are contesting which of the organisations should regulate the banking sector as the Senate conducts a public hearing on the NDIC Bill 2015
| By Maureen Chigbo | Mar. 23, 2015 @ 01:00 GMT |
UNTIL the Nigeria Deposit Insurance Corporation Bill 2015 is passed, the controversy over who regulates the banking sector will not be laid to rest. The debate resonated in Abuja, during the Senate public hearing on the Insurance Brokers’ Act, 2003 (Repeal and Enactment) Bill, 2015 and the Nigeria Deposit Insurance Corporation (NDIC) Act 2012 (Repeal and Enactment) Bill, 2015 on Monday, March 9.
At the public hearing, Senator Bassey Edet Otu, chairman, Senate Committee on Banking, Insurance and Other Financial Institutions, said that the position of the Central Bank of Nigeria, CBN, as the prime regulator in Nigeria’s financial system could not be disputed. According to him, the committee was committed to ensuring the safety of financial deposits of Nigerians and as such would not support a Bill capable of compromising the powers of both the CBN and the Nigeria Deposit Insurance Corporation, NDIC. Otu also commended the CBN for being objective and dispassionate in promoting Bills that will promote the safety of the country’s financial system.
Earlier, Suleiman Barau, deputy governor of the CBN in charge of the Operations Directorate, who made a presentation on behalf of Godwin Emefiele, governor of CBN, identified certain provisions in the proposed NDIC Act, which he noted sought to make the NDIC a parallel regulator of banks in Nigeria. Barau said that the NDIC Bill 2015, in its current form, equally sought to confer conflicting supervisory functions and powers on the NDIC over Nigerian banks, just as it aimed at creating overlapping regulatory responsibilities for the NDIC.
He observed that the NDIC, among other things, was equally seeking to carry out consolidated supervision of subsidiary banks without due regard to the CBN and other regulators in the financial system.
Citing trends around the world, he pointed out that since the global financial crises of the late 1990s; countries had moved towards consolidating supervision, hence a conflict would arise if primary regulatory functions were distributed among several bodies. Barau therefore cautioned against allowing issues of conflicting interest to thrive in the financial system, even as he assured that the CBN would continue to assist the NDIC in order to strengthen it in carrying out its primary objective of protecting deposit customers of banks.
Victor Odozi, former CBN deputy governor, Banking Supervision, under whose tutelage the NDIC was established in 1988 said that the corporation was established to complement and support the CBN and not to supplant and undermine it.
He therefore urged for greater collaboration between the two institutions, noting that the financial system stood to gain a lot from both bodies.
Tunde Lemo, pastor and former deputy governor of the CBN, in a brief presentation observed that the policy objective of the NDIC should be limited to deposit protection. The NDIC should be seen as a supervisor of the deposit taking institutions for deposit protection purposes and not as a regulator as the role would be in conflict with the CBN, he said.
Others, who spoke at the hearing were unanimous that the CBN remained the only regulator in the banking sector, but stressed that the proposed Bill should take into consideration the need for greater collaboration between the bodies to avoid turf wars.
However, Umaru Ibrahim, managing director of the NDIC, explained that the NDIC was not in any way seeking to compete with the CBN nor was it trying to introduce provisions that were targeted at taking over some of the powers of the CBN. Ibrahim, in his presentation, said even though disagreements existed between the corporation and the CBN, the NDIC was not seeking any role outside its lawful mandate.
The NDIC, he said was seeking the amendments to its Act to ensure safety and soundness in the banking system. The corporation was not in competition with the CBN but cherished its operational independence and mandate as provided by its Act. “We may have disagreements here and there, we are not reinventing the wheel. I noticed from the presentation of the CBN governor 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.”
David Mark, senate president, while declaring the public hearing open, said the exercise was aimed at obtaining authentic information from various interest groups to guide the Senate in its legislative action. Mark, represented by Victor Ndoma-Egba, expressed hope that the exercise, if successfully completed, will produce results that would acceptable to the generality of our citizenry.
|Tags: Bassey Edet Otu CBN Central Bank of Nigeria David Mark Godwin Emefiele Insurance Brokers’ Act NDIC Nigeria Deposit Insurance Corporation Senate Committee Suleiman Barau Tunde Lemo Umaru Ibrahim Victor Ndoma-Egba Victor Odozi