DEPOSITORS’ REIMBURSEMENT : NIGERIA’S EXPERIENCE BEING A PAPER PRESENTED AT THE INTERNATIONAL ASSOCIATION OF DEPOSIT INSURERS CONFERENCE HELD AT ARUSHA SPRINGS HOTEL, TANZANIA, BETWEEN 29 TH - 30 TH JULY, 2010. BY A. A. ADENIRAN 06/13/22 1 Depositors' Reimbursement: Nigeria's Experience
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DEPOSITORS’ REIMBURSEMENT : NIGERIA’S EXPERIENCE BEING A PAPER PRESENTED AT THE INTERNATIONAL ASSOCIATION OF DEPOSIT INSURERS CONFERENCE HELD AT ARUSHA.
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DEPOSITORS’ REIMBURSEMENT : NIGERIA’S EXPERIENCE
BEING A PAPER PRESENTED AT THE INTERNATIONAL ASSOCIATION OF
DEPOSIT INSURERS CONFERENCE HELD AT ARUSHA SPRINGS HOTEL, TANZANIA,
• NDIC – Brief History• Depositors’ Reimbursement• Payment of Insured & Un-Insured Deposits• Payment of General Creditors & Shareholders• Disbursement Methods• Challenges• The Way Forward
ABOUT NIGERIA DEPOSIT INSURANCE CORPORATION {NDIC}
• Nigeria Deposit Insurance Corporation {NDIC} as an Agency of the Federal Government of Nigeria was established by NDIC Act No. 22 of 1988 (now repealed and replaced by NDIC Act No. 16 of 2006).
• VISION : “To become one of the leading Deposit Insurers in the world” • MISSION : “To protect depositors and contribute to the stability of the financial system
through effective supervision of insured institutions, provision of financial and technical assistance to eligible insured institutions, prompt payment of guaranteed sums and orderly resolution of failed insured financial institutions”.
Reasons for Establishing NDIC:• Federal Government ‘s adoption of the Structural Adjustment Programme (SAP) in 1986 which
included the deregulation of the financial sector;• Lessons from other jurisdictions with explicit DIS;• Lessons of History: Experience of prior bank failure;• Change in Government Support Policy from protecting owners of banks to protecting
depositors.• To benchmark with the best practice in the world.
DEPOSITORS’ REIMBURSEMENT• The primary mandate of the NDIC is “Prompt payment of guaranteed
sums of failed insured financial institutions”. NDIC pays the following categories of Claims:• Insured deposits (Paid from the Deposit Insurance Fund – DIF);• Un-insured deposits (Paid from recovery of Assets of Closed Banks);• General Creditors ( -Do-);• Shareholders of Banks in liquidation( -Do-).
Priority of Payment: Insured Depositors; Un-Insured Depositors; Creditors; Shareholders.
• Direct Payments to Insured Depositors by the Corporation’s staff. This was used during the 1998 mass liquidation of 26 banks.
• Payments of liquidation dividends to un-insured depositors through appointed Agent Banks Agency arrangement with live banks to pay liquidation dividends; 1994 - 2005.
• Purchase & Assumption (P & A) for banks closed in 2006.
The Corporation put in place the following measures to ensure efficient deposit disbursement.
• Extension of claim-filing period beyond 18 months provided by the Act;
• Advertisement, Publicity, Seminars & Conferences for public awareness;
• Introduction of e-Fass (Electronic Financial Analysis Surveillance System) to gather information from banks prior to liquidation to ensure integrity of records;