2019

THIRTY YEARS OF

DEPOSIT

INSURANCE

SYSTEM IN

NIGERIA

INDIC

Nigeria Deposit Insurance Corporatio

Protecting your bank deposit

Table of Contents

PREFACE 6

CHAPTER ONE 8

CONCEPTS AND PRACTICES OF DEPOSIT INSURANCE. 8

CHAPTER TWO 24

MANDATE AND POWERS OF NDIC. 24

CHAPTER THREE. .32

GOVERNANCE AND ADMINISTRATIVE STRUCTURE 32

CHAPTER FOUR .40

LEGAL FRAMEWORK AND ISSUES 40

CHAPTER FIVE... .58

DEPOSIT INSURANCE FUNDING AND FUND MANAGEMENT ..58

CHAPTER SIX .69

METHODS OF PREMIUM ASSESSMENT. .69

CHAPTER SEVEN. 81

DEPOSIT INSURANCE COVERAGE .81

CHAPTER EIGHT. .86

MOBILE MONEY AND FINANCIAL INCLUSION. .86

CHAPTER NINE. ..95

BANK SUPERVISION. .95

9.0 INTRODUCTION. .95

9.1 RATIONALE FOR SUPERVISION .95

9.3.3.2 Consolidated Supervision. 104

9.3.3.4 Supervision of Domestic-Systemically Important Banks.. 105

CHAPTER TEN 109

BANK DISTRESS & FAILURE RESOLUTION 109

CHAPTER ELEVEN 134

BANK CONSOLIDATION. 134

CHAPTER TWELVE 147

INTER-AGENCY COOPERATION AND INTERNATIONAL STRATEGIC ALLIANCES.. 147

CHAPTER THIRTEEN 159

PUBLIC AWARENESS AND DEPOSIT INSURANCE SCHEME. 159

CHAPTER FOURTEEN 175

INSTITUTIONAL REFORMS AND CAPACITY BUILDING 175

14.1.1 Changes in the Organizational Structure of the NDIC 175

Year.. 190

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No. Of Staff Sponsored. 190

CHAPTER FIFTEEN.. 193

COMPLIANCE WITH CORE PRINCIPLES FOR EFFECTIVE DEPOSIT INSURANCE SYSTEMS .....193

CHAPTER SIXTEEN. 204

CORPORATE SOCIAL RESPONSIBILITY 204

CHAPTER SEVENTEEN 209

PROSPECTS AND LESSONS FOR THE FUTURE.. 209

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FOREWORD

Deposit Insurance Scheme (DIS) is recognized in many jurisdictions as one

of the three pillars of financial safety-net in addition to prudential

regulation/supervision and a lender of last resort function of the Central Bank

of Nigeria (CBN). This is not an exception to Nigeria given the history of bank

failure that led to the establishment of the Nigeria Deposit Insurance

Corporation (NDIC) in 1989.

For the past 30 years, the NDIC had proven to be effective in protecting

depositors, contributing to the financial system stability by making incidence

of bank ruin less likely and enhancing public confidence by providing orderly

mechanism for the resolution of failing and failed banks. / In line with global

best practice and also its public policy objectives, the Corporation protects

bank depositors in all categories of insured banks. Currently, at the NDIC's

insure deposit coverage limit, more than 95% of all bank depositors in

Deposit Money Banks (DMBs) including Non-Interest Banks (NIBs), Primary

Mortgage Banks (PMBs) and Microfinance Banks (MFBs) are covered,

thereby enhancing confidence in the banking system.

The NDIC is also the Resolution Authority for banks in Nigeria. The

Corporation has adopted different resolution mechanisms including Purchase

and Assumption, Open Bank Assistance, Assisted Mergers and Bridge Bank

in ensuring that the resolution of distressed institutions is done in an orderly

manner with minimal disruption to the payment system. This has earned the

NDIC the confidence of the domestic and global public.

In performing its supervisory role, the NDIC continues to enjoy close

collaboration with other safety-net participants in the financial sector,

especially with the CBN. It should be noted that the NDIC collaborates with

the CBN at the apex, strategic and operational levels. The CBN/NDIC

Executive Committee on Supervision as the highest decision-making body

between the two agencies is active and has been successful in guiding

Nigeria's bank supervisory framework to the highest global standard.

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The achievements, benefits and limitations of the deposit insurance practice

in Nigeria in the last three decades are the focus of the book. To

commemorate the 30th Anniversary of the NDIC of its existence and the

desire to bridge the knowledge gap on the features, benefits, limitations of

deposit insurance practice in Nigeria among the general public spurred the

NDIC to document its experiences in this book.

The book offers a profound and scholarly master piece for those interested

in being aware of insurable deposits, insured institutions, deposit insurance

coverage limits, funding structure and bank supervision. It also provide

coverage limits, funding structure and bank supervision. It also provide a

rich information on reimbursement process, distress resolution and

liquidation processes, internal administrative structure, consumer protection,

local and international collaboration around DIS practices in Nigeria, as one

of the leading DISs in the world.

It would also serve as a useful resource for depositors, creditors, debtors

and shareholders of banks, mass media, students, researchers, consultants,

government and practitioners of deposit insurance locally and abroad. The

book is written in simple and clear language. Also its precision, relevance,

accuracy and currency of facts presented should appeal to a broad range of

the reading public.

It is therefore my honor and privilege to present the book for wide

readership, this book which sets out the roles and explicit deposit insurance

scheme can play in the financial system, particularly in Africa where such

schemes are few, and which should assist the public in understanding the

roles and constraints of the NDIC, as well as provide valuable information

for academic work in this area. In addition, I believe that this publication will

fill the gap in the literature on deposit insurance in Nigeria.

I must not conclude this FORWARD without giving special commendation to

the pioneer members of the Management Team of the NDIC led by the first

MD/CEO Mr. John Ebhodaghe of blessed memory. They worked tirelessly

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with absolute dedication, integrity and commitment to lay a sound

foundation on which their successors have faithfully built till date.

Chief (Dr.) J. O. Sanusi, CON

Governor (1999-2004)

Central Bank of Nigeria.

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PREFACE

The book titled “30 Years of Deposit Insurance System in Nigeria"

documents the practice of Deposit Insurance by the NDIC within the last 30

years of its existence in the Nigerian financial system since 1989. It

represents a new edition of the earlier books by the Corporation entitled "20

Years of Deposit Insurance in Nigeria" and "A Decade of Deposit Insurance

in Nigeria: Issues and Challenges".

The occasion of 30 years of impactful and successful operation of NDIC and

the significant transformation in the practice of deposit insurance during that

period - such as extension of deposit insurance coverage to licensed Non-

interest banks, Mobile Money Operators, upward review of deposit insurance

coverage limits to different banking models in Nigeria, introduction of risk-

based and consolidated supervision of banks, differential premium

assessment system among other numerous internal, national and

international developments – informed the Research, Policy & International

Relations Department (RPIRD) the need to develop this valuable reference

material for the benefits of all stakeholders.

Hence, this publication is aimed at creating and strengthening awareness on

the benefits and limitations of deposit insurance system in Nigeria while also

building trust and confidence among depositors, banks' customers, general

public, students, relevant government bodies, professional associations,

educational institutions and mass media on capability of NDIC in delivering

on its mandates.

The book is structured along 17 Chapters with attempts to cover topics

around concept & practice of deposit insurance; NDIC mandates, vision &

governance structure; legal issues, deposit insurance coverage, funding &

premium assessment in Nigeria; mobile money & Pass-through deposit

insurance; bank failure resolutions; NDIC inter-agency & international

collaborations; NDIC compliance with the core principles for effective deposit

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insurance system and NDIC Public awareness and Corporate Social

Responsibility efforts.

All the experiences documented in the book would not be complete without

recognizing the contributions of the various departments, units and offices

in the Corporation. Equal worthy of mention are the support and

contributions of my Senior Management colleagues: Prince Aghatise

Erediauwa, Executive Director, Operations and Hon. Omolola Abiola-Edewor,

Executive Director, Corporate Services. Also appreciated is the support of

Legal, Insurance & Surveillance, Communications and Public Affairs Unit and

other departments in providing the information used for the book.

I also appreciate the professional effort of the Research team led by the

Director of the Research, Policy and International Relations Department, Dr.

S. A. Oluyemi, and those of Mr. Kingsley O. Nwaigwe, Mr. Hashim I. Ahmad

and Dr. Kabir S. Katata in making this book project a reality. The

contributions of Mr B. D. Umar, Director of Asset Management Department

and Barr. Nyako, Mr. O. Sulaiman and Dr J. Ade Afolabi, former Directors of

the NDIC are greatly acknowledged. I also wish to recognize all the staff of

the Research, Policy and International Relations Department for their efforts

towards making this book a reality.

Umaru Ibrahim, FCIB, mni.

Managing Director/Chief Eexecutive

Nigeria Deposit Insurance Corporation

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CHAPTER ONE

CONCEPTS AND PRACTICES OF DEPOSIT INSURANCE

1.0 INTRODUCTION

Deposit insurance has become an increasingly important feature of financial

safety-net arrangements used by various countries in an effort to ensure the

stability of banking systems and protect bank depositors from incurring large

losses due to bank failures (Demirgüç-Kunt, et al., 2005). According to the

International Association of Deposit Insurers (IADI, 2017a), there is rapid

expansion in the number of jurisdictions that have either established or

considering the establishment of a deposit insurance system in recent years.

Deposit Insurance is a key element in maintaining confidence in the banking

system and promoting financial system stability.

A deposit insurance system (DIS) refers to the set of specific functions

(whether performed by a dedicated legal entity or not) inherent in providing

protection to bank depositors, and their relationship with other financial

system safety-net participants to support financial stability (FSB, 2012). Two

broad types of deposit insurance systems identified by Kyei (1995) were

explicit and implicit deposit insurance. Although policymakers have choices

regarding how they can protect depositors of deposit-taking financial

institutions in their domains, explicit deposit insurance system stands out as

the preferred.

This chapter examines some conceptual issues regarding deposit insurance.

It also describes the growth in the adoption of the scheme worldwide, and

analyzes the core principles for effective deposit insurance systems as

enunciated by IADI.

1.1 CONCEPTUAL ISSUES

Deposit insurance and other compensation schemes are used to protect the

financial systems in many countries. Policymakers in general are proponents

of deposit insurance and they argue that it promotes stability in the banking

system and enhances depositors' confidence. Given that any disruption in a

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country's banking system can potentially create social costs, it is vital to

insulate banks, depositors and creditors from adverse shocks particularly

from systemic bank runs that occur when depositors lose confidence in one

or more banks.

An explicit deposit insurance is established by legislation or private contract

which spells out its mandates, powers and governance structure. Also, the

rules and regulations guiding participation by insured institutions, funding

arrangements, coverage and compensation limits, failure resolution,

reimbursement of depositors' claims, amongst other features, are all defined.

The establishment of an explicit deposit insurance system is a

pronouncement of government support for its nation's banking system that

indicates a concern about the potential for costly bank runs and the

treatment of bank depositors that also recognizes the importance of

transparency in government actions (Ketcha, 2009).

In the case of implicit deposit insurance, there is no formal system in place.

Under such an arrangement there is neither a formal means of funding the

system nor a commitment on the part of government with respect to

compensating depositors when failure occurs. All decisions and actions

under the implicit system can be flexible and uncertain. According to

Financial Stability Forum (2001), an explicit deposit insurance system is

preferable to any other deposit protection arrangement because it clarifies

the authorities' obligations to depositors thereby removing the uncertainties

and inequities of an implicit arrangement. Beyond that, all other parties

under the system have a better understanding of the options available to

them in the event of failure. It also limits the scope of discretionary decisions

that may result in arbitrary actions.

An explicit Deposit Insurance System (DIS) generally has two separate but

complementary primary objectives within the overall framework of the

financial safety-net. The first is to provide a minimum level of protection to

the wealth of the average household in the event of bank failure. Deposit

insurance guarantees that depositors will receive at least an amount of their

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funds which could be full for some depositors irrespective of the disposal

prospects of a failed bank's assets and more quickly than would otherwise

be the case (Hoelscher et al, 2006). The second is to contribute to the

stability of the financial system in conjunction with other safety-net

arrangements. Deposit insurance enhances financial system stability by

preventing bank runs. Bank runs are costly because they disrupt the financial

intermediation role played by banks.

The secondary objectives of the explicit DIS include enhancing healthy

competition in the financial sector, encouraging sophisticated depositors to

monitor their banks and enforce market discipline, reducing government's

obligations (that is contingent liability) and getting banks to contribute to the

cost of bank resolution, encouraging savings and contributing to an orderly

payment system.

Despite the benefits associated with DIS, it however, poses the risk of moral

hazard which is defined as the incentive for excessive risk-taking by banks

or those receiving the benefit of DI protection (FSF, 2001). Moral hazard

could be very costly as has been shown in some countries where banking

crises had taken place. For example, in the 1980s in the United States during

the Savings and Loans banks debacle.

Typically, a DIS is adopted in the aftermath of a banking crisis or when

industry conditions are deteriorating and unstable (Blair et al, 2006). Under

such conditions, depositors' confidence could be very low and therefore the

probability for bank runs could be very high. Therefore, government needs

to reaffirm its commitments to all economic agents of its desire to maintain

confidence in the system, ensure efficiency of the payment system as well

as the availability of credit to finance economic activities. Deposit insurance

is, however, not a panacea for resolving all failures in the banking system

but it could be a reliable third leg of the safety-net arrangement if properly

designed, well implemented and well understood by the public.

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For an explicit DIS to be effective, it needs a clear mandate to reinforce the

stability of the financial system and to contribute to its own sound

governance, comprehensive disclosure regime and greater accountability

(LaBrosse and Mayes, 2008). Other important factors that may enhance its

effectiveness are macroeconomic stability, soundness of the financial

system, high standards of supervision and regulation, adequate legal

framework and the structure of the banking system, (Hoelscher et al, 2006).

In most of the countries where explicit deposit insurance systems are in

practice, there have been different approaches to the practice depending on

the mandates and powers statutorily given to the deposit insurer. According

to LaBrosse and Mayes (2008), the types of deposit insurance mandates

range from 'paybox' to 'risk minimizer'. A `paybox' is a deposit insurer with

powers limited to paying out the claims of depositors in the event of bank

failure. In addition, it collects premiums from participating institutions and

also manage the deposit insurance fund. There are some `payboxes' with

extended powers. Thus, beyond the basic powers of a 'paybox', this category

can set regulations and also have authority to undertake liquidation. A `risk

minimizer' is a deposit insurer with powers to reduce the risks it is confronted

with. It has the broadest roles, mandates and powers. Besides those powers

of the second category of 'paybox', a 'risk minimizer' may be authorized to

resolve bank failures, monitor member institutions, carry out supervision,

provide financial assistance including open bank assistance, take

enforcement actions against member institutions, and control membership.

Structurally, whereas a 'paybox' is a small organization responsible for

administering the insurance system, a 'risk minimizer' is much larger. A `risk

minimizer' is expected to possess the capability to manage the scheme such

that it could minimize its losses.

1.2 GROWING GLOBAL RECOGNITION OF DEPOSIT INSURANCE

SYSTEM

Although deposit insurance was formally introduced in the US in the 1900s,

the history of deposit insurance system started in the early 1800s. The

insurance system as at that period was known as the New York's Safety Fund

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that covered only the State of New York. The objective of this insurance

scheme was to protect deposits and to circulate notes in the event of a bank

failure. However, the scheme was unsuccessful and became insolvent in

1842, as it was administered by a private-owned entity which did not have

the funding capacity like that of a government-owned entity. Subsequently,

8 new insurance schemes were introduced in the early 1920s and these

schemes also failed due to limited funding and insufficient monitoring

(Calomiris, 1990). The first federal government sponsored deposit insurance

system in the world was the Federal Deposit Insurance Corporation (FDIC),

introduced in the United States of America in 1934. In contrast to the

previous schemes, the FDIC was funded through capital provided by the

Treasury and the Federal Reserve Bank. The FDIC provided limited deposits

guarantee which still exists with several reforms in the deposit insurance

design features to restore depositors' confidence and ensure financial system

stability.

In Europe, Norway was amongst the earliest countries to adopt deposit

insurance for its savings institutions in 1921 and that was later extended to

the commercial banks in 1938. Meanwhile, in Western European countries,

deposit insurance started between the late 1970s and the early 1980s. The

failure of banks in Western Europe such as the Bankhaus Herstatt in

Germany in 1974, resulted in the adoption of the deposit insurance system

in some European countries like Belgium, Austria and France in 1974, 1979

and 1980, respectively. In addition, in 1994, most European countries had

an explicit deposit insurance system in place to comply with the European

Union's Directive on Deposit Insurance.

Deposit insurance has developed and expanded rapidly in recent years. The

main reason for the phenomenal growth experienced in the 1980s, 1990s

and even recently was the various financial crises that occurred in different

parts of the globe. The introduction of explicit DIS in many jurisdictions was

clearly part of the reaction to losses from such financial crises, and more

particularly, as part of the drive for financial stability nationally and

internationally (Allen & Wood, 2006). Furthermore, the inherent fragility of

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banks has also prompted the establishment of deposit insurance schemes in

many nations. This is because many countries around the world, irrespective

of their income or geographical location, have experienced one or more

banking crises during the last three decades of the twentieth century (Barth

et al, 2013).

Following the evolution of elaborate DIS by the United States Congress which

created the FDIC¹ through the Banking Act of 1933, the public initiative was

a response to the tragedy of great depression and the inability of the Federal

Reserve Bank to forestall the subsequent widespread of bank failures, which

totalled almost 10,000 between 1929 and 1933 (Eisenbeis and Kaufman,

2010). Before that time, however, it was on record that some form of

sophisticated credit and deposit insurance system had been introduced in

the former Czechoslovakia in 1924 (McCharty, 1980). In present times as

shown in Table 1.1, the Czech Republic established a DIS in 1994 and

Slovakia in 1996 (Djurdjica, 2017).

As at 1961, the number of jurisdictions operating explicit deposit insurance

systems had increased to 3 with the establishment of the systems in Norway

and India. In total, 7 countries adopted the system in the 1960s, as Canada

and Finland, amongst others later joined. In 1974, the number of countries

operating the systems had increased to ten (10) when countries like Japan

and Belgium, amongst others established DISs. However, from 1980 to

1990, the number of countries that had one type of explicit system or the

other had more than doubled. A total of 18 countries established explicit

deposit insurance systems in the 1980s, including the United Kingdom,

Switzerland, Chile, Kenya and Nigeria. The high increase in the number of

explicit deposit insurance systems was largely due to the occurrence of

financial crises witnessed in many countries during the period (Caprio and

Klingebel, 2003). The same factor was the principal determinant of the

phenomenal growth of about 128 percent witnessed from 1990 to 2000.

1 Although it is on record that the first formal system of deposit insurance was inspired by a Cantonese merchant's

mutual guarantee scheme, which was established in 1829, in the State of New York, to guarantee both banknotes

and deposits, and a number of other states established similar schemes subsequently (McCharty, 1980; p. 571-581).

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By the end of 2008, 99 countries had adopted explicit deposit insurance,

from 73 (an increase of about 36 percent) in 2000. The 2008 global financial

crisis contributed to the upward trend, with 5 countries, including Australia

and Thailand, adopting deposit insurance in 2008. As at 31st January, 2014,

there were 113 jurisdictions with one type of explicit deposit insurance

system or the other in operation while another 40 jurisdictions were studying

or considering the implementation of an explicit deposit insurance system

(IADI, 2017a). There were 139 countries with explicit DIS as at 22nd

September, 2017 (IADI, 2017b). Figure 1.1 shows the continuous cumulative

growth in the adoption of explicit deposit insurance systems by countries

from one (1) in 1933 to 139 in 2017.

Figure 1.1

Growth of Explicit Deposit Insurance Systems Worldwide

1933-2017

Number of Countries

140

139

120

11

100

89 94

99

80

73

60

32

40

20

1

3

15 10 9

0

1933 1961 1971 1974 1980 1990 2000 2004 2007 2008 2014 2017

Year

Sources: (i) Demirgüç-Kunt, Asli, Edward Kane and Luc Laeven (2014)

(ii) IADI (2017a)

Table 1.1

Adoption of Explicit Deposit Insurance Systems

Year

Adopted

1933 United States

1961 India, Norway

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1933-2013

Jurisdictions with Explicit Deposit Insurance Scheme

1963 Micronesia, Philippines

1967 Canada, Lebanon

1969 Finland

1971 Japan

1974 Belgium

1975 Marshall Islands

1977 Spain

1978 Netherlands

1979 Austria

1980 France

1982 United Kingdom

1983 Turkey

1984 Bangladesh, Switzerland

1985 Colombia, Iceland, Venezuela, RB, Taiwan

1986 Chile, Mexico, Trinidad & Tobago

1987 Denmark, Italy

1988 Kenya, Nigeria

1989 Ireland, Luxembourg, Serbia

1991 Peru, Isle of Man

1992 Portugal

1993 Bahrain, Hungary

1994 Czech Republic, Tanzania, Uganda

1995 Argentina, Brazil, Greece, Oman, Poland

1996 Belarus, Korea, Rep., Lithuania, Morocco, Romania, Slovak Republic,

1997 Algeria, Croatia, Macedonia, FYR

1998 Ecuador, Estonia, Germany, Gibraltar, Jamaica, Latvia, Ukraine

1999 The Bahamas, Bulgaria, El Salvador, Guatemala, Honduras,

2000 Cyprus, Jordan, Turkmenistan, Vietnam

2001 Liechtenstein, Nicaragua, Slovenia

2002 Albania, Bosnia-Herzegovina, Uruguay, Uzbekistan

2003 Malta, Paraguay, Russian Federation, Zimbabwe

2004 Hong Kong SAR, Indonesia, Moldova, Montenegro, Tajikistan

2005 Armenia, Malaysia

2006 Singapore

2007 Azerbaijan, Barbados

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2008 Australia, Kyrgyz Republic, Mauritania, Thailand, Yemen, Rep.,

2009 Afghanistan

2010 Libya, Nepal

2011 Brunei, Darussalam, Cameroon, Central African Rep., Chad, Congo

Rep., Equatorial Guinea, Gabon, Kosovo, Andora

2012 Sri Lanka, Bermuda

2013 Mongolia, Palestine

2014 - 20172 Ghana, Georgia, Niger, Senegal, Togo, Mali, Benin, Pakistan,

Colombia

Sources: (i) Demirgüç-Kunt, Edward and Luc (2014a)

(ii) IADI (2017a)

Apart from the establishment of explicit DIS in many countries, a large

number of countries had modified the existing systems by introducing

significant changes. For example, there was significant modification to the

system in the USA following the failure of several Savings and Loans Banks

and the subsequent collapse of the Federal Savings and Loans Insurance

Corporation (FSLIC), the deposit insurer of that sub-sector in the late 1980s.

In Germany, there were two revisions of the system in 1969 and 1998 after

its establishment. And generally in Europe since the European Union

Directive in 1994, there had been various revisions to deposit insurance

practice. Mexico reviewed its system twice in 1990 and 1999 since it was

established in 1986 and in Venezuela, a review was carried out in 2001 whilst

Brazil also had a revision in 2002. In Nigeria, a complete overhaul of the

statute was done in 2006 following noticeable inadequacies/weaknesses in

the system. The amendment of the statute was to ensure compliance with

Core Principles and to address some other issues limiting the effectiveness

of the system.

Furthermore, in response to the 2007/2008 global financial crises, some

jurisdictions strengthened the powers of deposit insurers' in the areas of risk

2 The countries listed are based on available information. Other jurisdictions that joined within this period might not

have been captured.

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assessment and intervention, which was documented by IADI (2012). For

instance, under the Dodd-Frank Wall Street Reform and Consumer Protection

Act of 2010, effective 21st July, 2010, FDIC was given conditional authorities

for special back up examinations at systemic non-bank financial companies

and bank holding companies; and backup supervisory enforcement actions

at any bank holding company.

In Canada, CDIC statutory powers were strengthened to include a full bridge

institution framework and an increase in emergency back-up funding

provisions. The Kazakhstan Deposit Insurance Fund (KDIF) was given the

right to conduct on-site inspections of problem banks with a view to

assessing the accuracy of depositors' information as well as evaluate the

accounting systems. There was also enhancement of Malaysia Deposit

Insurance Corporation (MDIC) risk assessment and intervention powers after

the new MDIC Act 2011 was put in place effective 31st December, 2010.

Many countries had either increased their deposit insurance coverage levels

or introduced blanket coverage in order to restore public confidence and

prevent bank runs and their attendant adverse consequences following the

global financial meltdown that shook the world. During the 2008 financial

crisis, 48 jurisdictions adopted some form of enhanced depositor protection

as part of financial stability measures,e 19 states declared full depositors'

guarantee (i.e. 'blanket guarantee'), 22 jurisdictions increased their deposit

insurance coverage permanently and 7 jurisdictions increased deposit

insurance levels on a temporary basis (IMF & IADI, 2010).

In further recognition of the growing importance of the role of DIS in

financial safety-net, the International Association of Deposit Insurers (IADI)

was founded in 2002 as the global standard-setting body for deposit

insurance systems with the ultimate goal of contributing to the enhancement

of deposit insurance effectiveness by promoting guidance and international

cooperation. With 25 founding members in 2002, including the NDIC, recent

statistics show that 107 organisations are affiliated with IADI, made up of

83 Members, 10 Associates (primarily central banks and bank supervisors)

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Number of Countries

90

80

70

60

Founding

2002

2003

2004

2005

2006

2007

2008

2009

2010

Year

30

50 40 30 20

79

79 80

83

72

62

63

65

46 48

52 54

42

34

35

25 26

10

0

and 14 Partners (other interested domestic and international organisations)

as at 31st March, 2017 (IADI, 2017c). This is further shown in Figure 1.2