The Nigeria Deposit Insurance Corporation (NDIC) has emphasized the need for the corporation to be involved in the process of licensing banks in collaboration with the Central Bank of Nigeria (CBN).
A statement by the corporation in Abuja on Thursday, said its Managing Director, Alhaji Umaru Ibrahim, made the call at a public hearing on the amendment of the Banks and Other Financial Institutions Act (BOFIA) 2004.
The News Agency of Nigeria (NAN) reports that the presentation was made to the Senate Committee on Banking, Insurance and Other Financial Institutions.
Ibrahim said the collaboration was to ensure necessary fit and proper checks and to establish clearer assessment of the status of financial institutions before licensing them.
On the BOFIA bill, the managing director said that variances that would be perceived as over-lapping mandate between the corporation and CBN should be clarified to avoid ambiguity.
He noted that the clarification was critical in the area of the resolution of failing banks, adding that the NDIC should be recognised as the primary actor in the resolution process.
According to him, CBN intervenes in the event of systemic crisis.
Ibrahim explained that a clear delineation of roles between the NDIC and CBN would strengthen the legal framework.
The managing director said it would also contribute to effective and efficient collaboration in the supervision and regulation of the banking sector.
“In a bid to establish effective legal instruments to secure the safety and stability of the nation’s financial system, there is a need to closely examine enacting laws with a view to harmonising the positions of the NDIC and CBN in the NDIC Act 2006 and the Banks and Other Financial Institutions Act (BOFIA) 2004.
“The bill seems to suggest the option of the appointment of other entities in the liquidation of failed banks.
“The bill should be amended to reflect the NDIC as the sole liquidator of failed banks based on the Corporation’s core mandate,’’ he said.
Ibrahim in his presentation said that the approval of the CBN besought in the implementation of supervision, control, management and distress resolution of banks as reflected in the bill.
He suggested that directors of banks should be held liable for the causes of the failure of their banks if found to be negligent in management decisions.
The MD explained that imposition of penalties and persecution of various offences would serve as a deterrent to officers and directors of banks.
He noted that the move would ensure that the banking industry complied with available laws and regulation. (NAN)
– Jul. 16, 2020 @ 22:58 GMT