CBN, NDIC Disagree over Banks’ Supervision

Central Bank of Nigeria (CBN), the Nigerian Deposit Insurance Corporation and other stakeholders on Monday failed to agree on who should have full control over the supervision of banks in the country and guarantee the safety of depositors’ funds.

The House of Representatives is repealing and re-enacting the NDIC Act, 2006 to provide  protection for depositors’ funds in banks.

However, at a public hearing on the bill organised by the House Committee on Banking/Currency, the CBN argued that the NDIC could not assume full supervision of banks without reaching an agreement with the apex bank.

Mrs. Tokunbo Martins, CBN’s director of Banking Supervision, who gave its position, said, “NDIC must have an agreement with CBN before it can supervise banks.”

Martins stated that the CBN had yet to come to terms with the real reasons the NDIC was backing the repeal of its Act, adding that the apex bank would later submit a comprehensive response to the committee.

She added, “There can never be two captains in the same ship as the NDIC cannot be on  self employment  as liquidator of banks,  deposit insurer and bank supervisor without an agreement  with the CBN.”

But, the NDIC and other stakeholders opposed the CBN, saying the NDIC could supervise and as well liquidate banks if the present Act was repealed and re-enacted.

For example, Mr.  Ganiyu Ogunleye, a former managing director of NDIC, said rather than pursue a narrow route, the apex bank should take a “broader” appreciation of the proposed law.

He added, “This is inappropriate as we are all agencies of government working towards a common goal.”

Umaru Ibrahim, managing director of NDIC, told the committee that the proposed amendment would make the corporation to post better results in the future.

He stated, “‎Mr. Chairman, please, permit me to state for the purposes of emphasis that the NDIC was established by Decree No. 22 of 1988, now the NDIC Act, 2006 to operate the Deposit Insurance Scheme in Nigeria.

“A Deposit Insurance Scheme is a financial guarantee established to protect depositors in the event of a bank failure and also to offer a measure of safety for the banking system.

“The Deposit Insurance Scheme forms part of the financial safety net necessary to reduce the risk of severe financial crises.

“Without an appropriate financial safety net, problems regarding solvency or liquidity of a financial institution have the potential of‎ turning into full-blown financial crisis.

“With an appropriate financial safety net in place, depositor confidence is enhanced and t‎he likelihood of financial crises is reduced to the barest minimum.”

On his part, Mr. Aminu Tambuwal, speaker of the House expressed confidence that “the amendment will shore up investors confidence and enhance the personal fortunes of Nigerians.”