LEGISREPORTS NG – The Central Bank of Nigeria (CBN) has rejected the proposed statutory amendment seeking to give the Nigerian Deposits Insurance Corporation (NDIC) powers to liquidate insurance institutions in the country.
The CBN said given such powers to NDIC may amount to having “double captains to a one ship”, saying it is the responsibility of CBN to discharge such responsibilities.
The position of the CBN was made known when the bank’s director of Banking Supervision, Mrs Tokumbo Martins appeared at a one-day public hearing of the House of Representatives committee on banking and currency on a bill that sought to amend the 2006 Act and re-enact the 2014 NDIC Act.
NDIC had earlier seeks for more powers and legal frameworks in the new bill to discharge its statutory responsibilities of risk-minimisation and surmount challenges that arise against the backdrop of the 2009 global economic crisis.
The corporation also sought for solitary power to liquidate financial insurance institutions found to be lacking the necessary requirements to guarantee safety of depositors’ monies.
CBN’s director, Mrs Tokumbo Martins said the apex bank could not make its position known to the commission due to pending issues about the NDIC amendment.
She said, there two or three areas of the amendment that include mandate, self appointment as liquidator and termination of insurance firm’s license which “still need to be harmonised between NDIC and CBN.”
NDIC managing director, Umaru Ibrahim had said the corporation proposed for amendment areas that seek to ensure “prompt payment of insured deposits following failure of an insured institution by reducing of time reimbursement from 90 days to 60 days,” and “powers to deal with parties at fault i.e directors and officers who cause the failure of an insured institution.”
“Power to reimburse insured depositors notwithstanding pending court suits, prevention of court execution against the assets of the Corporation for a liability of a failed insured institution, prohibition of court orders aimed at preventing the Corporation from carrying out its statutory function of deposit protection among others.
He said “there have been challenges that have threatened the safety, stability and soundness of the banking system which include banking malpractices leading to the failure of some banks as was experienced in the banking crises of 2009.”
This concern made the corporation to require “the necessary legal backing to carry out certain proactive actions to protect depositors and safeguard the financial system,” he said.
The managing director however said he was surprised to hear CBN’s objection to certain areas of the amendment, after getting written approval and support of the CBN governor, Emefiele.
“I wrote a letter to Emefiele and I later met him. He has agreed on all the areas. Mr Chairman, if you remember, I even showed you the copy of the letter by the CBN governor,” Ibrahim responded.
But CBN’s representative, Mrs Martins quickly responded by saying that the “CBN governor did not understand what NDIC is proposing.”
She instantly tried to backtrack her statement by saying “Mr chairman, I want to make this clear, what they presented was different and what the governor agreed was something different, in the letter that he signed.”
This report was prepared by our staff.