By Sam Diala
To deepen financial inclusion and drive the liberalisation of financial service initiatives, the Nigeria Deposit Insurance Corporation (NDIC) will provide insurance for depositors of Payment Service Banks (PSB) and Money Market Operators (MMO) across the country.
Licensed operators of other non-banking financial service platforms will also be protected by the apex deposit insurance establishment through its Deposit Insurance Coverage (DIC) scheme in order to reduce the population of the unbanked.
These measures were announced by the Managing Director/Chief Executive (MD/CE) of NDIC, Umaru Ibrahim, in his goodwill message to participants at the Corporation’s 2019 workshop for business editors and financial correspondents in Yola, Adamawa state capital.
The workshop was themed “Nigeria Banking System Stability – Tackling Emerging Issues”.
He said that the NDIC, in pursuit of its commitment towards the Central Bank of Nigeria (CBN) financial inclusion initiative, would provide insurance for PSB depositors and the MMO and also guarantee payment of stipulated insured sum in the event of the closure of the closure of the platforms.
“Following the issuance of the Framework for the Licensing and Regulation of Payment Service banks (PSBs) by the Central Bank of Nigeria (CBN) which stipulated the extension of Deposit Insurance Coverage to the depositors, the Corporation will protect the depositors of PSBs and guarantee to pay them N500,000.00 as insured sum in the event of their closure.
“To assist in the promotion of the financial inclusion initiative of the CBN, the NDIC introduced the Framework for a Pass-through Deposit Insurance scheme to enhance confidence, safety and stability of the mobile payment system.
“The deposit insurance scheme caters for the interest of the users of Mobile Money platforms as it guarantees payment to the subscribers of the funds domiciled in Mobile Money Operators Trust Pool accounts in insured institutions in Nigeria.”
He noted that the Corporation had promoted other types of financial service sub-sectors in order to drive the financial inclusion initiative and promote economic growth.
“The other milestones recorded by the NDIC in the area of financial inclusion has been the promotion of other types of banking sub-sectors such as non-interest banks and strengthening of the Microfinance policy in order to build more inclusive banking system where every Nigerian would have equal access to economic opportunities”, Ibrahim said in his goodwill message read by the deputy director, Corporate Communications, NDIC, Ibrahim Kudu.
He said that the Corporation had, since inception in 1989, kept faith with its primary public policy objectives of contributing to financial system stability by making incidences of bank runs less likely, “while protecting depositors by providing an orderly means of resolution and compensation in the event of bank failures”.
He recalled that the intervention of the NDIC saved millions of bank depositors’ funds in closed banks and led to the repositioning of many banks for effective operation and better contribution during the banking consolidation exercise.
“The Corporation responded efficiently to the post consolidation crisis experienced in the banking sector by adopting the Purchase and Assumption (P & A) resolution option to resolve the problems of 13 banks closed in 2006 for their failure to meet the new consolidation/recapitalization of N25 billion financial threshold introduced by the CBN.
“In addition to the Purchase & Assumption option, over years, the Corporation has been very creative in the design and implementation of various safety-net mechanisms in response to evolving crisis in the nation’s banking, payment and financial systems.
“We also embarked on other significant reforms in the period including development of Enterprise Risk Management, implementation of Differential Premium Assessment System (DPAS), Capacity Building in Risk-Based Supervision (RBS), deployment of a Performance Management System, enhanced Deb Recovery System and Increased Pay-out to both insured and un-insured depositors”, Ibrahim said.
According to him, the milestones had earned the Corporation various global recognitions as well as make other countries to seek its assistance in strengthening their own similar establishments.
“In August 2019, the Corporation signed a Memorandum of Understanding (MOU) on experience sharing and capacity building with the Korean Deposit Insurance Corporation (KDIC) and the Taiwan Central Deposit Insurance Corporation to further deepen the implementation of the DIS in Nigeria.
“The MOU also aims to enhance our capacity to understand and supervise the FINTECH and the Digital currencies phenomenon. FINTECH and Digital currencies are not only witnessing rapid deployment globally but also locally in Nigeria”, the NDIC boss said.
Ibrahim said that the Corporation’s emphasis on human capital development led to the establishment of the NDIC Academy in June 2013, to build a highly skilled human resource base to drive the actualisation of the Corporation’s mandate and save cost of organizing in-house and implant courses for staff formerly organised in rented facilities.
Enumerating the achievements of the Academy, the Corporation’s boss said the NDIC Academy, was recently accredited as a training hub for the financial services industry by the Council of the Chartered Institute of Bankers of Nigeria (CIBN) after a rigorous accreditation process.
He disclosed that in 2018, the Corporation recorded giant strides in its efforts to continuously improve on service and process delivery to its stakeholders as it received the International Standard Organization (ISO) certifications in three (3) areas, namely Information Security, Business Continuity and Information Technology Management from the British Standards Institute (BSI).
Ibrahim further disclosed that the Corporation was the first government agency in Nigeria to be certified on all the three (3) Standards at the same time and that it was awarded the best performing Ministerial SERVICOM Unit (MSU) in the country in 2017, following an assessment of its public service delivery by SERVICOM Office in the Presidency.
Recalling that the media contributed to its 30 years of successful operation, Ibrahim urged the participants to embrace the advantages that technology and Fintechs offer in the promotion of financial service stability noting that “the entire dynamics of banking has been altered to such an extent that it poses serious challenges for both operators and regulators”.