- To mitigate risks, boost depositors’ confidence
BY COBHAM NSA – Amidst evolving economic challenges, the Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC) have pledged to deepen their collaboration towards safeguarding Nigeria’s financial system.
Importantly, both organizations believe working closely together will help in mitigating risks and ensuring depositor confidence in the nation’s banking sector.
This was the understanding expressed when the newly appointed NDIC Management, led by the Managing Director and Chief Executive, Mr. Thompson O. Sunday visited the CBN Headquarters in Abuja on Thursday.
Receiving the NDIC delegation, the CBN Governor, Mr Olayemi Cardoso, congratulated the new Managing Director and the Executive Director Operations on their appointments while expressing optimism about enhancing cooperation between both institutions.
Cardoso said, “Our meeting today is a clear testament to our willingness to work together. The CBN counts on NDIC’s support in navigating the uncertain times that we are in.”
According to the CBN Boss, the NDIC’s management visit underscores the shared commitment of both institutions to ensure the existing collaboration becomes more robust and resilient in the face of shifting economic conditions in the country.
He asserted that in the two years of piloting affairs at the apex bank have thrown up pivotal lessons in the financial industry, requiring the CBN and the NDIC proactively deal with potential shocks by leveraging modern tools for financial stability.
Describing the NDIC’s visit as timely, Cardoso stressed the need for both institutions to work closely in reducing hazards, fostering trust and bolstering depositors’ faith in the financial system.
Speaking earlier, the NDIC Managing Director and Chief Executive, Mr Thompson O. Sunday, praised the CBN’s reform initiatives under the leadership of Mr. Cardoso, particularly the stabilization of the forex market as well as the ongoing recapitalization of Deposit Money Banks (DMBs)
He said the Corporation is focused on aligning its operations with the NDIC Act 2023 (as amended), explaining that the process of embarking on a strategic restructuring to better align operations with its risk minimization mandate while also developing a new corporate strategy as the one in use will expire at the end of the current year.
Reiterating the NDIC’s willingness to collaborate with the CBN towards enhancing financial system stability, Mr Sunday appreciated the CBN’s support in premium collection from insured institutions.
Additionally, he listed the Corporation’s recent milestones as the payment of N54.62 billion to 691,418 depositors of the defunct Heritage Bank, and the declaration of a liquidation dividend of 9.2 kobo per Naira to uninsured depositors within a year of closure and the ongoing efforts to develop a target funding framework.
Furthermore, the NDIC Chief Executive said among existing challenges facing the Corporation are the absence of a unique identifier such as the Bank Verification Number (BVN) for corporate customers and the difficulty in collecting premiums from insured institutions that do not maintain accounts with the CBN.
While indicating NDIC’s willingness to work with the CBN to address these gaps, Mr Sunday however urged the apex bank to think about developing a joint crisis preparedness framework with the Corporation to enhance crisis management within the financial system.
In her intervention, the CBN Director of Financial Policy and Regulation Department, Mrs Rita Sike explained that the joint crisis preparedness framework could be dealt with under the auspices of the Financial Services Regulation Coordinating Committee (FSRCC).
She said the CBN is currently working to enhance the Credit Risk Management System (CRMS) to integrate the Global Standing Instruction (GSI), which will allow for the on-boarding of Other Financial Institutions (OFIs).
A statement by Hawwau Gambo, NDIC’s Head of Communication and Public Affairs, said on the Corporation’s delegation had the Executive Director, Operations, Dr Kabir Katata; Director, Human Resources, Mr. Yakubu Shehu; Director, Legal Department, Mr. Olufemi Kushimo; and Mrs Regina Dimlong, Assistant Director, Communications & Public Affairs Department.
On their part, CBN team included Mrs Rita Sike, Director of Financial Policy and Regulation Department; Mr Nnadi Maduka of Corporate Communication Department; and Mrs Salamatu Jubril- Adeniji of Compliance Department.
