Senate Passes NDIC Bill to Safeguard Bank Depositors’ Funds, Stabilise Financial Institutions

*Consolidates board members’ appointmentSunday Aborisade in Abuja

The senate on Tuesday passed for third and final reading a bill meant to strengthen the capacity of the Nigeria Deposit Insurance Corporation (NDIC) to safeguard bank depositors’ funds, ensure the stability of financial institutions, and promote trust in the banking system.

The legislation, titled, “Nigeria Deposit Insurance Corporation Act No 33 of 2023,” was sponsored by Senator Adetokunbo Abiru (Lagos East) and all the members of the Senate Committee on Banking, Insurance and other Financial Institutions.

Abiru presented the report of the panel at plenary on Tuesday. He said the bill would also make NDIC more effective, safeguard its independence and autonomy, and align it with current realities and best practices.

The bill consolidated the power of the president to appoint the chairman and members of the board of NDIC, while the Central Bank of Nigeria (CBN), which hitherto recommended the appointees, would now concentrate on supervising the corporation.

Based on the new amendment of its Act, the NDIC would focus on the scrutiny of the banks.
Abiru stated that despite the fact that the NDIC 2023 Act made substantial improvements to the 2006 Act, its implementation had been fraught with debate.

He said stakeholders had consistently engaged in series of appeals on the need for an amendment of the Act to address issues that had been raised concerning it.

According to the senator, “The Nigerian Deposit Insurance Corporation (Amendment) Bill, 2024, is, thus, a critical piece of legislation aimed at strengthening the Nigerian financial system.

“The proposed amendments will enhance the NDIC’s capacity to safeguard depositors, ensure the stability of financial institutions, and promote trust in the banking system.

“Given the rapidly evolving nature of the financial sector, this bill represents a timely response to the challenges and opportunities that lie ahead.”

Abiru added that the current bill would lay to rest once and for all, the claims that the bill that was assented to by former President Muhammadu Buhari was materially different from what was passed by the ninth National Assembly.

He said, “To further empower the corporation by guaranteeing its independence in performing its statutory functions in line with Section 1 (3) of the principal Act.

“The principal (2023) Act curiously restricts the President’s power to appoint the Managing Director and Executive Directors and provides that they are to be persons recommended by the Central Bank of Nigeria governor.
“The (2024) bill (now) seeks to amend this provision to bring it in line with and in consonance with Mr. President’s power of appointment as enshrined in the Constitution of the Federal Republic of Nigeria 1999 (as amended).
“The provisions of the principal Act which makes the Permanent Secretary, Ministry of Finance the Chairman of the Board is also being reviewed.

“This is because the workload and busy schedule of that office is such that makes such appointment untenable.
“The importance of the need for the Minister of Finance to constitute an Interim Management Committee for the Corporation within 30 days after the expiration or termination of the tenure of the board is also introduced in the bill.

“This is to forestall the recent situation where the Corporation faces challenges in its operations as a result of the absence of a board.”

Abiru said there was a general agreement among stakeholders on the importance of NDIC, as it was set up for the protection of depositors and to guarantee the settlement of insured funds when a deposit-taking financial institution could no longer repay their deposits, thereby helping to maintain financial system stability.

He said, “Considering the above, therefore, the general consensus among stakeholders was that it is important that the legal framework is reviewed.

“This is to make the corporation more effective to discharge its functions, safeguard its independence and autonomy and to bring it in line with current realities and best practices.

“This is particularly because the corporation plays a vital role in safeguarding the interests of depositors and promoting confidence in the financial sector.

“The evolving challenges in the global and domestic banking environments necessitate the amendment of the current law to keep pace with these developments and ensure the NDIC remains fit for purpose.”

Abiru said over 30 written memoranda and numerous oral submissions were received. All the written memoranda and oral presentations at the hearing supported the bill, he said.