STRUCTURE AND FUNCTIONS OF NIGERIAN DEPOSIT INSURANCE CORPORATION (NDIC). The NDIC’s role is to administer the deposit insurance system (DIS) in Nigeria and protect depositors.
The Corporation provides incentives for sound risk management in the Nigerian banking system and promotes as well as contributes to the stability of the financial system. The NDIC manages two deposit insurance funds, the DIF for universal banks and the Special Insured Institutions.
Insurance Fund (SIF) for licensed Microfinance Banks (MFBS) and Primary Mortgage Institutions (PMIs).
what is the Nigerian Deposit Insurance Corporation NDIC?
The Nigerian Deposit Insurance Corporation (NDIC) is a statutory body established by the NDIC Act No. 16 of 2006 with the exclusive mandate of administering the Deposit Insurance System in Nigeria.
The NDIC was established in response to the collapse of several banks in the 1980s, which led to the loss of depositors’ funds. The NDIC is a member of the International Association of Deposit Insurers (IADI), which is an association of deposit insurers from over 170 countries.
The NDIC’s mission is to protect depositors’ funds and ensure the safety and soundness of the Nigerian banking system. The NDIC achieves its mission by:
- Guaranteeing the payment of deposits up to a specified limit in the event of the failure of an insured financial institution.
- Supervising insured financial institutions to ensure that they are operating in a safe and sound manner.
- Promoting financial literacy and public awareness of the deposit insurance system.
The NDIC is funded by a levy on insured financial institutions. The levy is based on the amount of deposits held by each institution.
The NDIC has played an important role in protecting depositors’ funds and promoting the safety and soundness of the Nigerian banking system. Since its inception, the NDIC has paid out over N1 trillion to depositors of failed banks.
Here are some of the benefits of the Nigerian Deposit Insurance Corporation:
- It protects depositors’ funds from losses in the event of the failure of an insured financial institution.
- It promotes financial literacy and public awareness of the deposit insurance system.
- It contributes to the stability of the Nigerian banking system.
The NDIC is an important institution in the Nigerian financial system.
Functions of the Nigerian Deposit Insurance Corporation
- Insuring all deposit liabilities of licensed banks: Such other financial institutions (hereinafter referred to as “insured institutions”) operating in Nigeria within the meaning of Sections 16 and 20 of this Act to engender confidence in the Nigerian banking system;
- Giving assistance: To insured institutions in the interest of depositors, in case of imminent or actual financial difficulties of banks particularly where suspension of payments is threatened, and avoiding damage to public confidence in the banking system;
- Guaranteeing payments to depositors; in case of imminent or actual suspension of payments by insured institutions up to the maximum as provided for in section 20 of this Act;
- Assisting monetary authorities: In the formulation and implementation of policies so as to ensure sound banking practice and fair competition among insured institutions in the country; and
- Pursuing any other measures: Necessary to achieve the functions of the Corporation provided such measures and actions are not repugnant to the objects of the Corporation.
some facts about the Nigerian Deposit Insurance Corporation NDIC
The NDIC is a parastatal under the Nigerian Ministry of Finance. The corporation is charged with protecting the banking system from instability occasioned by runs and loss of depositors\’ confidence, It operates under the Nigeria Deposit Insurance Corporation Act (1990).
The NDIC is a member of the Financial Reporting Council of Nigeria The NDIC complements the regulatory and supervisory role of the Central Bank of Nigeria (CBN), although it reports to the Federal Ministry of Finance. The NDIC advises the CBN in the liquidation of distressed banks and manages distressed banks\’ assets until they are fully liquidated.
The NDIC has a supervisory role over insured banks. In April 1996, the Chief Executive of NDIC said that the corporation had 514 case files of insider abuse and corruption for the police to prosecute. In December 2007, the NDIC announced that as of January 1, 2008, it would start providing deposit insurance services to microfinance institutions in Nigeria
Public finance may simply be defined as the aspect of economics which deals with government revenue and expenditure. In other words, public finance involves the financial activities of government as they relate to revenue or income, expenditure and debt operation and their overall effect on the economy. It is seen as financial activities that concern borrowing and lending, receiving and spending by the federal, state, and local governments and their agencies in order to create an impact on individuals and corporate bodies.
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