Nigeria Deposit Insurance Corporation (NDIC)

The Risk Analyst is a bi-annual newsletter from the Enterprise Risk Management Department (ERMD) of the Nigeria Deposit Insurance Corporation (NDIC). It aims to increase awareness of risk management within the corporation and provide insights to stakeholders on ERMD's activities. This edition includes an interview with Mrs. Amal L. Haruna, the Director of ERMD/CRO, and feature stories on various risk-related topics affecting the corporation such as Japa Syndrome and top risks. The newsletter also highlights the corporation's Business Continuity Management System and its recent ISO recertification.

The Nigeria Deposit Insurance Corporation (NDIC) has released its Service Charter, outlining its commitment to protecting depositors and ensuring financial stability. The charter details the NDIC's mandate, which includes deposit guarantee, bank supervision, failure resolution, and bank liquidation. It also specifies the core values and beliefs that guide NDIC employees and lists the services provided to customers, performance targets, and grievance mechanisms.

The Nigeria Deposit Insurance Corporation Act of 2023 has been enacted to replace the previous act from 2006. The new act aims to provide a framework for the Nigeria Deposit Insurance Corporation (NDIC) to protect depositors and ensure financial system stability. The act outlines the functions, powers, and governance structure of the NDIC, as well as the regulations for deposit insurance schemes and failure resolution of insured institutions. The Act establishes the NDIC as the insurer of all insurable deposit liabilities of insured institutions. The NDIC is tasked with providing orderly compensation to depositors in the event of bank failures and contributing to financial system stability. One notable aspect of the Act is the framework it provides for managing and resolving failing financial institutions. This includes measures for financial assistance, mergers and acquisitions, and the liquidation of insured institutions. It also addresses issues of criminal prosecution and outlines offenses and penalties related to financial malpractice.

The Nigeria Deposit Insurance Corporation (NDIC) has reaffirmed its commitment to the safety and wellbeing of its employees and stakeholders through its Business Continuity Management (BCM) policy. This policy ensures the resilience of critical operations against disruptions, with the aim of protecting depositors and resolving issues related to failing insured institutions. The NDIC's BCM system adheres to the ISO 22301:2019 standard, reflecting the corporation's dedication to continuous improvement and organizational requirements.

The Nigeria Deposit Insurance Corporation (NDIC) is introducing a revised framework for Differential Premium Assessment System (DPAS) in 2023. This system aims to differentiate premiums payable by insured financial institutions based on their risk profile, promoting fairness and effective risk management. The framework applies to all insured banks in Nigeria, including commercial, merchant, non-interest, microfinance, primary mortgage, and payment service banks. The revised framework seeks to incorporate changes in the Nigerian banking system and align with international best practices.

The "Thirty Years of Deposit Insurance System in Nigeria" publication celebrates the 30th anniversary of the Nigeria Deposit Insurance Corporation (NDIC) and its impact on the Nigerian financial system since 1989. The book details the evolution of deposit insurance practices, including extending coverage to non-interest banks and mobile money operators, as well as adapting risk-based and consolidated bank supervision. It emphasizes the NDIC's role in protecting depositors, contributing to financial system stability, and guiding Nigeria's bank supervisory framework to global standards. It offers insights into the NDIC's mandates, governance, legal framework, deposit insurance coverage, funding, and international collaborations. The book also aims to enhance public awareness and build trust among depositors, banks, government bodies, and other stakeholders. This work serves as a valuable reference for depositors, creditors, bankers, academics, and practitioners, addressing a gap in deposit insurance literature in Nigeria.

This paper delves into the crucial aspects of funding deposit insurance systems (DIS), drawing lessons for Nigeria from international best practices and the experiences of countries like the United States, Malaysia, the Philippines, and Japan. It highlights the significance of funding for the successful implementation of DIS and explores various issues related to funding mechanisms, sources, premium assessment, and fund management. The paper aims to provide valuable insights for policymakers and stakeholders in Nigeria's deposit insurance system, particularly in areas such as target fund ratio, premium assessment, treatment of operating surplus, funding arrangements, and investment policy. Ultimately, the goal is to enhance the effectiveness and stability of Nigeria's DIS by incorporating lessons from global practices.

This paper analyzes the funding of deposit insurance systems, focusing on lessons for Nigeria. The research reviews funding arrangements and fund management practices in other countries, such as the USA, Malaysia, the Philippines, and Japan, highlighting that most explicit deposit insurance systems use an ex-ante funding arrangement, where funds are invested in government debt. The study suggests that Nigeria can benefit from implementing a target funding ratio framework, assessing premiums more frequently, grouping insured institutions into risk buckets, and retaining operating surpluses within the deposit insurance fund. Furthermore, the paper emphasizes the importance of a well-defined investment policy for the deposit insurance fund, aligning with principles of safety, liquidity, and high returns.

The Nigeria Deposit Insurance Corporation (NDIC) has released a framework for pass-through deposit insurance for subscribers of mobile money operators (MMOs) in Nigeria. This framework aims to engender confidence in mobile payment services and promote financial inclusion, reducing the number of unbanked individuals. Key elements include deposit insurance coverage up to N500,000 per subscriber, eligibility criteria for coverage, and regulatory guidelines for MMOs to ensure the safety and security of subscribers' funds.

The NDIC (Nigeria Deposit Insurance Corporation) has developed a new Early Warning System (EWS) to better predict bank failures in Nigeria. This system aims to overcome the shortcomings of the existing eFASS EWS, which relies on financial ratios and peer group analysis. The new EWS uses statistical, econometric, and artificial intelligence techniques, incorporating both regulatory information and market data. It is forward-looking, enables stress testing, and considers the dynamic nature of the industry and the economy, aiming to provide more accurate and timely warnings of potential bank failures.

The Nigeria Deposit Insurance Corporation (NDIC) Service Charter outlines the corporation's commitment to ensuring efficiency and stability in the Nigerian banking system. It emphasizes deposit guarantee, bank supervision, distress resolution, and bank liquidation as key mandates. The charter also details the NDIC's vision, mission, core values, and services rendered to various stakeholders, including depositors, financial institutions, and the general public. The document further provides information on performance targets, grievance mechanisms, stakeholder obligations, and the NDIC's collaborative efforts with other regulatory bodies, aiming to enhance public trust and maintain a robust financial environment.

The Nigeria Deposit Insurance Corporation has released an updated Code of Conduct for Examiners to reinforce discipline and professionalism in bank examinations. This code aims to enhance ethical practices, safeguard the corporation's integrity, and promote transparency during examinations of insured financial institutions. The code provides guidelines for examiners' conduct both on-site and off-site, covering aspects like dressing, integrity, conflict of interest, and confidentiality. It also outlines disciplinary measures for any breaches of the outlined rules, ensuring adherence to international best practices.

The Nigeria Deposit Insurance Corporation (NDIC) has released guidelines for providing financial and technical assistance to insured banks and deposit-taking financial institutions in Nigeria. These guidelines aim to broaden the NDIC's statutory responsibilities and ensure consistent and equitable assistance to eligible institutions. The assistance is intended to protect depositors in cases of financial difficulties, particularly where suspension of payments threatens public confidence in the banking system. Banks seeking financial assistance should show evidence of substantial debt repayment by shareholders and a commitment to non-interbank deposit drives, among other requirements.

The Nigeria Deposit Insurance Corporation (NDIC) is celebrating 25 years of operation. Established in 1988, it has played a crucial role in protecting depositors and strengthening the financial system in Nigeria, especially after the Structural Adjustment Programme. The NDIC has increased deposit insurance coverage over the years and extended it to microfinance and mortgage banks. It has also adopted innovative resolution methods for failed banks, contributing to financial inclusion and stability, and plans to continue improving its services and public awareness.

This document, "Perspectives on the Nigerian Financial Safety-Net," is a collection of articles and papers inspired by the author Ganiyu Adewale Ogunleye's experience in practical banking operations and policy design in Nigeria. Ogunleye, a former Managing Director/Chief Executive Officer of the Nigeria Deposit Insurance Corporation (NDIC), offers insights into the Nigerian financial sector, covering topics such as bank regulation, supervision, and deposit insurance. The book addresses major developments in the Nigerian financial sector, including banking reforms, universal banking, banking consolidation, and the establishment of a deposit insurance scheme, and explores the causes of bank failures, ethics in banking, bank frauds, and regulatory challenges. The book is intended to serve as a reference for banking practitioners, students, and lecturers of banking and finance, and provide policymakers with information on developments in the banking industry.