The Nigeria Deposit Insurance Corporation (NDIC) was established on 15 June 1988 to strengthen the safety net for the newly liberalized banking sector, following the recommendation of former Central Bank of Nigeria governor Ola Vincent. The NDIC provides a safety net for depositors in the newly liberalized banking sector.
The NDIC is a parastatal under the Nigerian Ministry of Finance. The corporation is charged with protecting the banking system from instability occasioned by runs and loss of depositors’ confidence. It operates under the Nigeria Deposit Insurance Corporation Act (1990). The NDIC is a member of the Financial Reporting Council of Nigeria. The NDIC complements the regulatory and supervisory role of the Central Bank of Nigeria (CBN), although it reports to the Federal Ministry of Finance. The NDIC advises the CBN in the liquidation of distressed banks and manages distressed banks’ assets until they are fully liquidated.
The NDIC has a supervisory role over insured banks. In April 1996, the Chief Executive of NDIC said that the corporation had 514 case files of insider abuse and corruption for the police to prosecute. In December 2007, the NDIC announced that as of January 1, 2008 it would start providing deposit insurance services to microfinance institutions in Nigeria.
In February 2002, the governor of the Central Bank, Joseph Oladele Sanusi, issued a notice revoking the license of Savannah Bank, saying the bank did not have enough assets to meet liabilities and did not comply with CBN obligations, and that the regulators had to prevent further deterioration. The NDIC took over as liquidator, sealing the bank’s offices. The matter dragged through the courts, with the bank’s owners eventually being awarded damages of N100 million in February 2009.
Under a Purchase & Assumption arrangement, the NDIC may arrange for the assets and liabilities of a failed bank to be taken over by another bank. For example, in October 2007 the United Bank for Africa assumed the fixed assets and private sector deposit liabilities of African Express Bank under direction of the CBN and the NDIC.
At times, the NDIC has been caught up in controversy over legal actions against managers and others who have caused insured banks to fail. Shortly before his retirement in July 2009, the Nigeria Deposit Insurance Corporation accused the Inspector General of Police Mike Okiro of failing to repay a N166 million loan he obtained between 2000 and 2001 from the Lead Bank, since liquidated.
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- ^“Nigeria Deposit Insurance Corporation Act”. International Centre for Nigerian Law. Retrieved 2009-09-28.
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- ^“Nigerian Deposit Insurance Corporation (NDIC) Insures Microfinance Institutions”. Prisma MicroFinance Inc. December 17, 2007. Retrieved 2009-09-28.
- ^“Case Review: Savannah Bank Plc c. Central Bank of Nigeria” (PDF). Perchstone & Graeys. Archived from the original (PDF) on 2011-07-15. Retrieved 2010-03-01.
- ^“UBA takes over Afex Bank …Pays out N9bn to customers of acquired banks”. Daily Sun. October 10, 2007. Archived from the original on October 12, 2007. Retrieved September 28, 2009.
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- ^“Okiro owes failed bank N166m – NDIC – It’s a personal deal – Police – Reps summon him”. Nigerian Tribune. July 23, 2009. Retrieved 2009-09-26.[dead link]