BY CHINYERE OBIORA, LAGOS – The Nigeria Deposit Insurance Corporation (NDIC) has listed poor public awareness and cumbersome judicial processes as major challenges facing bank failure resolution in the country.

According to the Corporation, issues concerning long drawn litigations on winding up actions and debt recovery matters by shareholders have regrettably continued to challenge smooth, quick and effective resolution of the nation’s banking sector crisis

Deputy Director Research, Policy and International Relations, NDIC, Dr Kabir S. Katata said court action by erstwhile shareholders; problems of assets realisation loans and physical assets due to large size of insiders loans; poor loan documentation; poor quality; and lack of secondary market for risk assets are among factors that also hinder bank crisis resolution in the financial system.

Speaking at the NDIC Annual workshop for Business Editors and Finance Correspondents in Yola, Adamawa State, Katata explained that with banking resolution measures meant to protect depositors and minimise adverse effects of crisis on banking and financial stability, all hands must be on deck to make them work in the overall good of the economy.

He said effective crisis management and resolution will also help to ensure continuity of basic banking functions, minimise reliance on public sector support, allocate loses to firm owners and protect clients’ funds and assets.

Describing effective resolution as a series of systemic action designed to end a bank’s distressed condition with minimal disruption and without exposing taxpayers to loses, Katata said such will promote efficient, transparent and orderly winding down and exit of institutions in the financial system.

He said as at December 2018, NDIC has paid cumulative sum of N8.25 billion as insured amount to about 442,999 depositors of banks; a total of N2.97 billion paid to 83415 depositors of closed Micro Finance Banks (MfBs) while the sum of N70.53 million was paid to 869 depositors of Primary Mortgage Banks (PMBs).

The NDIC official maintained that to improve the effectiveness of payment to insured depositors and boost confidence, the Corporation is considering the use of e-payment and advance payment system to ease the various processes.

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