Senate Passes Bill To Enhance NDIC Capacity To Safeguard Bank Depositors

ABUJA – The Senate on Tuesday passed the Nigeria Deposit Insurance Corporation’s (NDIC) bill for third and final reading to strengthen the capacity of the corporation to safeguard depositors, ensure the stability of financial institutions, and promote trust in the banking system. The legislation, titled, ‘Nigeria Deposit Insurance Corporation Act No 33 of 2023,’ was sponsored by Senator Mukhail Adetokunbo Abiru (APC: Lagos East) and all the members of the Senate Com­mittee on Banking, Insurance and other Financial Institutions. Abiru presented the report of the panel at plenary on Tuesday.

He said the bill would also make the NDIC more effective, safeguard its independence and autonomy and bring it in line with current realities and best practices. The bill consolidated the pow­er of the president to appoint the chairman and members of the board of the NDIC while the Cen­tral Bank of Nigeria (CBN) which hitherto recommends the appoin­tees, would now concentrate on supervising the corporation. The NDIC based on the new amendment of its Act, would focus on the examination of the banks.



He noted that despite the fact that the NDIC 2023 Act made sub­stantial improvements to the 2006 Act, its implementation had been fraught with continuous debates. Abiru specifically said stake­holders had consistently been en­gaging in series of appeals on the need for an amendment of the Act to address all the issues that have been raised concerning it. “The Nigeria Deposit Insur­ance Corporation (Amendment) Bill, 2024, is thus a critical piece of legislation aimed at strengthening the Nigerian financial system.

“The proposed amendments will enhance the NDIC’s capacity to safeguard depositors, ensure the stability of financial institu­tions, and promote trust in the banking system. “Given the rapidly evolving nature of the financial sector, this bill represents a timely response to the challenges and opportuni­ties that lie ahead,” he said. According to him, the current bill would lay to rest once and for all, the claims that the bill that was assented to by former President Muhammadu Buhari was materi­ally different from what was passed by the 9th National Assembly.

He said, “To further empower the corporation by guaranteeing its independence in performing its statutory functions in line with Section 1 (3) of the principal Act. “The principal (2023) Act cu­riously restricts the president’s power to appoint the Managing Director and Executive Directors and provides that they are to be persons recommended by the Central Bank of Nigeria governor. “The (2024) bill (now) seeks to amend this provision to bring it in line with and in consonance with Mr.

President’s power of appoint­ment as enshrined in the consti­tution of the Federal Republic of Nigeria 1999 (as amended). “The provisions of the prin­cipal Act which makes the Per­manent Secretary, Ministry of Finance the Chairman of the Board is also being reviewed. “This is because the workload and busy schedule of that office is such that makes such appoint­ment untenable.

“The importance of the need for the Minister of Finance to con­stitute an Interim Management Committee for the corporation within 30 days after the expiration or termination of the tenure of the board is also introduced in the bill. “This is to forestall the recent situation where the corporation faces challenges in its operations as a result of the absence of a board.” Abiru said there was a general agreement among stakeholders of the importance of the NDIC as it was set up for the purpose of the protection of depositors and to guarantee the settlement of in­sured funds when a deposit-taking financial institution can no longer repay their deposits, thereby help­ing to maintain financial system stability.

He said, “Considering the above, therefore, the general con­sensus among stakeholders was that it is important that the legal framework is reviewed. “This is to make the corpora­tion more effective to discharge its functions, safeguard its indepen­dence and autonomy and to bring it in line with current realities and best practices. “This is particularly because the corporation plays a vital role in safeguarding the interests of depositors and promoting confi­dence in the financial sector.

“The evolving challenges in the global and domestic banking environments necessitate the amendment of the current law to keep pace with these develop­ments and ensure the NDIC re­mains fit for purpose.” Abiru said over 30 written memoranda and numerous oral submissions were received. All the written memoranda and oral presentations at the hearing sup­ported the bill.

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