Financial system stability: NDIC partners global bodies on knowledge, information sharing

COMFORT EKELEME, Business Editor

Managing Director/ Chief Executive Officer, Nigeria Deposit Insurance Corporation (NDIC) Mr. Bello Hassan, Thursday in Lagos said the corporation has embarked on robust collaboration and cooperation with other deposit insurance agencies and global bodies, particularly in the area of knowledge and information sharing.

He said the aim of these efforts is to effectively address the technological, legal, regulatory, and supervisory challenges facing the deposit insurance system.

This is even as he maintained that Nigerian banks have remained resilient, by being safe, stable, and sound in spite of the challenges posed by the COVID-19 pandemic, stressing that the success was due largely to the proactive policies and support of the regulatory authorities.

Mr. Hassan in his welcome address at the 2022 NDIC retreat for members of the House of Representatives Committee on Insurance and Actuarial Matters, with the theme “Deposit Insurance in Nigeria: Restrategizing for Tomorrow”, said that regulators in financial systems across the globe are also brainstorming on fresh ideas to ensure that the financial system remains resilient, sound and stable so as to continue to play its supportive role in the economy.

He also said that NDIC has enhanced collaboration with relevant stakeholders like the National Assembly, Federal Ministry of Finance, Budget & National Planning, the Judiciary, and the Central Bank of Nigeria (CBN) on almost all relevant activities.

While thanking, the Chairman, and all other Honourable Members, for their unending support to the Corporation, the NDIC boss said, “I consider this session an excellent opportunity to share ideas on how to restrategise the Corporation to effectively deliver on its Public Policy Objectives as well as its mandates.

He maintained that NDIC, has, as its the public policy objectives: to protect depositors by providing a mechanism for reimbursing them in case of imminent or actual failure of insured institutions; to contribute to the financial system stability in its role as a key participant in the financial safety-net, and to enhance public confidence and systemic stability by providing a framework for the resolution and orderly exit mechanism for failing and failed insured institutions.

“The sustainable growth of any economy whether developing or developed would largely depend on the resilience and stability of its financial sector. As you are aware, financial stability is about the resilience of the financial system to stress, macroeconomic shocks, or problems at a specific institution or market, from disrupting the broader financial system.

“Maintenance of financial resilience, therefore, requires preparation, in advance, through diligent planning, laws, robust policies, and sound institutions to implement the laws and policies.

“The CBN, supported by the NDIC, continues to strengthen the stability of the financial system and build a resilient financial system through robust policies, supervision, and other functions within the banking sector” he stated.

According to him, some of the measures taken to strengthen the deposit insurance system in Nigeria include the migration to the Differential Premium Assessment System (DPAS) from the flat-rate method of assessing and collecting premiums with a view to aligning the pricing of deposit insurance to the risk profile of individual banks and the collaboration with the CBN to shift from the compliance-based examination to Risk-Based Supervision (RBS).

He, however, noted that the theme for the retreat could not have come at a more opportune time. “Our world as we know is rapidly changing. Innovations and threats to existing models of business, regulation, and supervision are manifesting in our operations.

In her goodwill message, the board chairman of NDIC, Mrs. Ronke Sokefun maintained that the corporation has over the years made tremendous efforts to protect consumers of financial services and promote financial system stability.

She noted that Deposit Insurance is a system established by the government to protect depositors against the loss of insured deposits in the event that the bank is not able to meet up to its obligations to depositors.

Mrs. Sokefun who was represented by the Board member, Adewale Adeleke noted that for the NDIC to continue to successfully deliver on its mandate, it must be sufficiently empowered.

Also speaking, the Chairman House of Representatives Committee on Insurance and Actuarial Matters, Hon Darlington Nwokocha disclosed that the main essence of the retreat gathering is re-strategizing all that has to do with the banking and Insurance today, protecting the depositor’s funds and putting all the insurance instrumentality to making sure that a lot of confidence is been reposed while boosting the confidence of customers in different banks is the key mandate of NDIC.

He said, “If we boost the confidence of the customers, having the necessary approach in banking, and making sure that we tune down every reactive tendency, and turn up every proactive approach in addressing the hazardous issues in the banking sector, I think we will have a whole long way to go.

“This meeting is aimed at making sure that there is a proper fix between the legislative arm and the executive on how to make the necessary laws and how to carry out the administration of those laws so that there will be a common front and a common denominator just to one mandate to making sure that our banking sector and our customers in the banking sector have the necessary confidence to drive the process,” he said.