Nigeria News

NDIC: Excessive Litigations Threaten Deposit Insurance

Managing Director/Chief Executive, Nigeria Deposit Insurance Corporation (NDIC), Alhaji Umaru Ibrahim has warned that excessive litigations and the lack of understanding of the legal role of the corporation as liquidator is currently hampering the effective settlement of depositors who had been victims of failed financial institutions.

Speaking in Abuja at the opening of a sensitisation seminar for NDIC external solicitors, he noted, however, that the corporation had made giant strides in protecting depositors’ funds through its statutory mandate of deposit guarantee, bank supervision, bank failure resolution and bank liquidation in the past 20 years of its existence.

The NDIC boss also disclosed that non-interest deposit money banks would soon be asked to commence payment of premiums to ensure that their depositors are adequately covered in the event of failure.

He said the execution of court judgements against the assets of the corporation as liquidator and the difficulty in recovering debts owed to failed banks were part of the challenges that must be addressed for the NDIC to have a greater impact on depositor protection.

Ibrahim noted that the seminar was a crucial step towards tackling identified challenges by enhancing the capacity of lawyers to gain a full understanding of the legal issues involved.

He said: "Jaiz bank in a couple of weeks will soon start paying premium or contributions having clocked one year and so also Stanbic-IBTC Bank’s non-interest window will also attract coverage."

However, in his key note address, Ibrahim expressed regrets over some of the difficulties being encountered by the corporation in terms of recovering debts owed to failed banks due to its "inability to trace the debtors, lack of collateral and other related challenges.

According to him: "The problems of excessive litigations which makes it difficult for the corporation to wind up failed banks and settle depositors  and other creditors within reasonable time; execution of court judgements against the assets of the corporation as the liquidator of failed banks based on the misunderstanding of the role of NDIC and the lack of proper understanding of the distinction in the legal status of NDIC as liquidator/deposit insurer by legal practitioners, the court and the public" had been a major setback in deposit insurance practice in the country.

He said lawyers in particular have important roles to play in ensuring the corporation discharged its mandates efficiently and effectively.

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