Nigeria Deposit Insurance Corporation (NDIC), has said that functional Deposit Insurance Scheme (DIS) as a essential instrument of generating depositors’ confidence in the banking system as well as maintaining financial stability in any nation’s economy.
Mr. Ganiyu Ogunleye, managing director/chief executive of NDIC said that in design of DIS, the scheme should be made to not only protect the net worth individuals and even the small and unsophisticated depositors who would be most affected in event bank failure.
Ogunleye spoke at the opening of workshop on "DIS coverage and public awareness" organized by the African Regional Committee (ARC) of the International Association of Deposit Insurance (IADI) in Abuja.
The managing director, who is also the chairman of the ARC, emphasized that one of the important aspects in the design of (DIS) is the determination of the coverage scope and level so that every depositor would have a sense of security.
Ogunleye said that "the determination of both the scope and level of DIS coverage is crucial because they determine the potential liabilities under the scheme and also influence the extent to who which depositors’ confidence in the banking system can be promoted and sustained by the scheme.
"I wish to note that the public policy objectives of the DIS are typically to protect small and unsophisticated depositors and to maintain financial stability. The appropriate coverage level and scope should be set to have the least possible negative impact on the normal operation of the financial system; they should be credible and internally consistent with other design features of the DIS".
Ogunleye noted that even when the scheme was perfectly designed; it would not be effective to achieve its objectives if the stakeholders were unaware of its existence or unclear about the terms and conditions of coverage.
He canvassed for a sustained effective public awareness programme to change wrong perceptions and behaviours and further enhance public confidence in the deposit insurance system and safety and soundness of the financial system.
The IADI was established in May 2002 with its registered office at the Bank of International Settlement in Basle, Switzerland. The association commenced with 23 members and has grown up to 73 members with mission "to contribute to the enhancement of deposit insurance effectiveness by promoting guidance and international cooperation".
