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Tag: NDIC

  • NDIC remits N15.4b into Consolidated Revenue Fund

    NDIC remits N15.4b into Consolidated Revenue Fund

    The Nigeria Deposit Insurance Corporation (NDIC), remitted a total of N15.4 billion to the Consolidated Revenue Fund between 2007 and 2014.

    The Fiscal Responsibility Commission (FRC), made this known in a commendation letter it wrote to the NDIC praising the Corporation. It commended the management of NDIC for compliance with the submission of its audited financial statements of 2007- 2014 and prompt payment of operating surplus.

    This letter dated December 14, last year was signed by the FRC Acting Chairman, Victor Muruako.

    The FRC report indicated that the NDIC was well above average in compliance with Sections 21- 23 of the Fiscal Responsibility Act (FRA) 2007 and “had fully complied with the provisions of the General Reserve Fund into which 20 per cent of its Operating Surplus was retained in accordance with Section 22 (2) of the FRA 2007”.

    The report also commended the Corporation’s compliance with the payment of 25 per cent of its Gross Revenue to the Consolidated Revenue Account of the Federation in accordance with Ministerial Circular on Internally Generated Revenue (IGR).

    According to the FRC, “it is quite commendable that NDIC is one of the few Corporations that have fully complied with IFRS, which has greatly improved financial reporting of the activities of the agency,” the report observed.”

    The FRC also reviewed the Corporation’s annual approved budget and considered it to be of high standard in terms of process and content. “The accounts were generally of high standard and depict compliance with international best practice,” the FRC wrote.

    The FRC gave the NDIC the all clear when it wrote that “the Corporation’s record keeping is also commendable and the integrity of its financial reporting is enhanced with the adoption of International Financial Reporting Standards (IFRS).”

  • NDIC releases deposit insurance guidelines on mobile payment

    NDIC releases deposit insurance guidelines on mobile payment

    The Nigeria Deposit Insurance Corporation (NDIC) has released deposit insurance guidelines on mobile payments system (MPS), which is known as “Pass-Through Deposit Insurance scheme”.

    The “Pass-Through Deposit Insurance scheme” is the protection provided by the NDIC to mobile money subscribers, whereby the Corporation insures funds that are deposited by a Mobile Money Operator (MMO) in the deposit money banks (DMBs).

    The MMO acts as a custodian on behalf of the one or more subscribers who are actual owners of the funds as if those actual owners have deposits in the deposit money banks (DMBs).

    Mobile Payments System (MPS) refers to payment services operated under financial regulation and performed through the use of mobile devices such as smart phones, cell phones, tablets, personal digital devices and other electronic devices.It is also a convenient, safe and affordable way by which subscribers make instant transfer of funds and execute payments for goods and services from anywhere at any time without having a bank account.

    The public policy objectives of the Pass-Through Deposit Insurance guidelines which form the framework for the scheme are as follows:

    (a)  Guarantee the payment of insured sums to subscribers of MMOs in the event of failure of insured institutions where pool funds are maintained.

    (b) Enhance confidence of subscribers and ensure continuity of the Mobile Payments System (MPS).

    (c) Promote financial inclusion by protecting and ensuring the safety of the MPS; and

    (d) Promote the stability of the Nigerian financial system.

    Some of the salient elements of the NDIC Pass-Through Insurance consist of the following:

    • The subscribers of MMOs shall be insured up to the maximum coverage level of N500,000.00 per subscriber per Deposit Money Bank or the applicable coverage level for depositors in line with the NDIC Act.
    • Subscribers’ funds in pool accounts and other deposits in the same institution under the same capacity shall be aggregated and insured up to the maximum coverage limit.
    • The relationship between the MMOs and their subscribers shall be based on Bare Trust Arrangement. (Bare Trust refers to an account where each beneficiary holds a separate share and is entitled to protection within the parameters of the scheme.)

  • NDIC insures banks’ liabilities

    The Nigeria Deposit Insurance Corporation (NDIC) has developed a framework for insuring the deposit liabilities of non-interest banks which were hitherto not covered under its Deposit Insurance Scheme (DIS).

    A statement from the NDIC explained that “the public policy objectives of the framework are based on public interest which seeks to provide corresponding protection to holders of non-interest financial products similar to that of conventional banks.”

  • NDIC: Judiciary key to financial sector stability

    NDIC: Judiciary key to financial sector stability

    The Nigeria Deposit Insurance Corporation (NDIC) has identified the judiciary as a critical institution in achieving its core mandate of depositor protection and financial system stability.

    Its Managing Director and Chief Executive, Alhaji Umaru Ibrahim, stated this at the opening ceremony of the corporation’s 2015 sensitisation seminar for judges of states and Federal Capital Territory (FCT) High Courts in Abuja.

    He said no matter how robust the NDIC’s extant laws might be, the corporation needed the legal support to achieve its mandate, adding that it would continue to seek the cooperation and understanding of the judiciary, which is constitutionally vested with the powers of interpretation of statutes and laws in the federation.

    Represented by the Corporation’s Executive Director Operations, Prince Aghatise Erediauwa, he  said the forum was intended to address the challenges being faced by NDIC in its bid to successfully discharge its core mandates. The theme of the seminar was: Challenges to Deposit Insurance Law and Practice in Nigeria.

    Prince Aghatise enumerated some of the major challenges to include the menace of protracted and complex bank liquidation related litigations as well as their attendant consequences; the execution of court judgments against the assets of the Corporation as the liquidator of failed banks and lack of proper understanding of its proper legal status on its role as a Deposit Insurer which is distinct from its status as a bank liquidator.

    He urged  participants at the forum to critically examine these challenges with a view to proffering a lasting solution in order to empower the NDIC to effectively discharge its mandate.

    Declaring the seminar open, the Chief Justice of Nigeria and Chairman, Board of Governors of the National Judicial Institute, Hon. Justice Mahmud Mohammed, noted that some of the esoteric legal issues bordering on the established rights of creditors, shareholders and depositors of failed financial institutions were genuine matters before the courts.

    The Chief Justice of Nigeria therefore called for a clear and proper understanding of the concept and operation of bridge banks as well as the execution of assets of failed banks within the context of deposit insurance system (DIS).

    This, according to him, would facilitate better appreciation of the legal issues by the judiciary and eventually lead to more informed court judgments.

     

  • NDIC hails faith-based community bank in Jos

    Rural dwellers in Plateau State and such low income earners as petty traders who cannot buy shares in big banks can now do so at a bank they can call their own established by Church of Christ in Nation (COCIN).

    The development has earned the microfinance bank praise from the National Deposit Insurance Corporation (NDIC).

    The microfinance bank set up  in 2012 is growing and so is the profile of its customers in Jos city and the entire state. This much was revealed when the bank held its maiden Annual General Meeting (AGM) at which it briefed its clients.

    COCIN is one of the largest indigenous churches in Northern region with its headquarters in Jos. The microfinance bank is wholly owned by the church. Its shareholders are equally the poor segments of the society who attend the church.

    The bank’s objectives include helping the poor to grow, encouraging petty traders to save and offering advice to small-scale traders. The bank also grants credit facilities to its customers who have genuine business plans.

    At the AGM held at Yelwa Club Jos, the bank gave an impressive account of itself. They declared profits to the admiration of shareholders.

    “Light Microfinance Bank Limited has made an unprecedented profit of N336 million as the year 2015 ended, against the N174million when the bank started its operations in 2012,” declared its chief executive Mr. Tat Danjuma.

    “The state licence Microfinance bank run by the Church of Christ in Nations (COCIN) has a clients capacity of 8,776 pulling as the leading microfinance bank in Plateau State,” said chairman of the board, Mr Bernard Poyi.

    The managing director/Chief Executive Officer, Mr. Tat Danjuma said, “the laudable impact made by the bank in the years under review was not without Challenges” This according to him, “most of their clients are farmers and are been affected with the consistent attacks on villages in the state by unknown gunmen coupled with the activities of Boko Haram within the northern part of the country where their clients transacted businesses within the states.

    He maintained that the bank at the moment has only two branches in the northern zone of the state, and are working on other branches one each in other senatorial zones. “We have already put all modalities in place to open one branch in Kurgwi to cover the southern part of the state, as well one in Gindiri to cater for the abundant clients within the central zone respectively,” he said.

    The maiden AGM has given share holders and other clients a motivational direction and have set a prospect for the future by endorsing the increment of authorized capital from the initial N200million to N500million. While an increased in bank’s paid up capital from N183million to N300million.

    The Zonal Comptroller of National Deposit Insurance Corporation (NDIC) in charge of Plateau, Gombe, Yobe and  Bauchi state zonal office, Mr Emmanuel Vantau said the bank is moving in the right pace as he monitored their operation within the years under review with a risk of 2.0% compared to other micro-finance industries in the zone.

    Applauding the efforts of the management of the bank, Mr. Vantau said, “The difference between a good bank and a bad one is just a prudent management. This bank has been well managed at this level, and I will urge the management to keep it up for the benefit of the low income earner and petty traders who have no access to the conventional banks in the state”

    Vontau encouraged customers to “buy more shares in the bank, seek relevance financial advice from the bank and allow the bank to help them grow their small businesses as the company is set to be one of the leading national microfinance bank in no distant time in the country”

    One of the bank customer, Mrs Habila Yohanna said, “I’m so happy today because the bank is giving us hope as our bank, most of us have no access to the big banks but we feel at home with this one. The discuss with us and advice us in our small trade”

    A farmer in Bukuru said, “The bank help some of us to procure fertilizer last year, the bank is so supportive, it will remain the bank of poor people like us, I wish them long life and speedy growth for the benefit of the poor.”

     

  • NDIC: Poor funding stalling MSMEs’ growth

    The Nigeria Deposit Insurance Corporation (NDIC) has linked the challenges of micro, small and medium enterprises (MSMES) to their poor funding.

    It said inadequate funding of MSMEs remained a major challenge, adding that as at June 30, deposits mobilised by the 936 microfinance banks stood at N173.3 billion.

    Its Managing Director, Alhaji Umaru Ibrahim, who spoke at a  one-day sensitisation workshop for operators of microfinance banks (MfBs), said all hopes were, however, not lost. He said effective risk management would help MfBs to respond to risks and also promote profitability and objective decision making.

    He said the workshop with Deepening the practice of microfinance banking through effective enterprise risk management as theme, created q platform for the corporation to share experiences on latest developments in the sub-sector. Experience sharing, he said, would ensure the survival of such institutions.

    Ibrahim said for MfBs to access the N220 billion MSMEs fund launched by the Federal Government last year, they must demonstrate strong enterprise risk management capable of enhancing the eligibility criteria.

    “NDIC, as an insurer, reimburses deposit of microfinance banks up to a maximum limit of N200, 000 per depositor in the event of failure of such microfinance bank. The new average coverage level represents an increase of 100 per cent over the earlier coverage level of N100, 000,” he said.

    The NDIC chief said microfinance banks have to be interested in enhanced risk management frameworks and take necessary steps to improve their compliance levels with sound risk management.

    “For instance, an increase in the interest rate could make micro-loan repayment difficult. Furthermore, new loans could become less attractive for small borrowers due to affordability pressures. Therefore, micro-finance banks should be able to assess borrowers’ capacity and willing-ness to continue with loan repayments in the case of an interest rate rise. Lack of thorough and effective assessment of market risk could have devastating impact on banks,” he said.

    Represented by Director, Special Insured Institutions Department at the NDIC, Joshua J. Etopidiok, Ibrahim  also said the Central Bank of Nigeria (CBN) had in September, 2013 issued the “Revised Regulatory and Supervisory Guidelines for Microfinance Banks in Nigeria” aimed at not just introducing a risk-based approach to the supervision of microfinance banks, but also in response to the changing financial landscape.

    He said the enterprise risk management framework was “developed to provide a proactive process to assess the safety and soundness of all microfinance banks operating in the country. He warned that microfinance banks must reduce risks on their own terms through effective management oversight and performance evaluation.”

    Ibrahim said the term enterprise risk management, in the context of a microfinance bank, was “the process of controlling the likelihood and potential severity of an adverse effect”, adding that, NDIC would deploy Differential Premium Assessment System (DPAS) in determining Deposit Insurance Premium for micro-finance banks.

    He assured that NDIC would continue to train only microfinance banks, which are up to date in their premium payment to the corporation, adding that, the corporation’s ability to sustain its efforts in ensuring that all insured institutions remained on the path of sustainable growth and development, depended heavily on the premium contributions by insured institutions to fund the Special Insured Institution Fund (SIIF).

     

  • NDIC to banks: No to casualisation

    NDIC to banks: No to casualisation

    The Nigeria Deposit Insurance Corporation (NDIC) has sounded a note of warning to banks, saying it is no longer at ease with the use of contract staff deployed in most deposit money banks as well as the practice of compelling female staff as vehicles for money deposits.

    Giving this warning was the Managing Director and Chief Executive of the Corporation, Alhaji Umaru Ibrahim.

    He spoke in Abuja during a courtesy call on him by the President and other Council Members of the Chartered Institute of Bankers of Nigeria (CIBN).

    The NDIC boss said “bank examination reports had indicated that the high incidences of fraud and forgeries in the banking system had been linked to outsourced or contract staff.”

    Expatiating, he said “in as much as regulators appreciated the necessity for banks to cut costs, it was incumbent on all stakeholders to fashion out capacity building and other strategies to motivate all employees to contribute positively rather than engaging in criminal acts that impact adversely on the entire banking system.”

    Of concern to him, he stressed, is the plight of female employees in the banking industry.

    He noted that “banks often engaged female employees and set for them very high targets on deposit mobilisation and other asset creation ventures, which put undue pressure on the female employees.”

    Responding, the President of the Institute, Mrs Debola Osibogun regretted that over 75 per cent of fraud cases in the sector had been traced to outsourced bank staff who were neither professionals nor members of the CIBN.

    Mrs. Osibogun  who lamented that the Institute had no control over the banks, however hinted that a Committee of the Institute was already working with heads of operations of banks on the challenges being posed by the outsourced staff and would soon submit its report to the Central Bank of Nigeria (CBN) for consideration.

  • NDIC boss urges banks on outsourced staff

    NDIC boss urges banks on outsourced staff

    The Nigeria Deposit Insurance Corporation (NDIC) has called for a closer look at the phenomenon of outsourced or contract staff in banks to ensure healthy and sound practices in the banking industry.

    Managing Director/Chief Executive of the Corporation, Umaru Ibrahim, made the call in Abuja during a courtesy call on him by the President and other Council Members of the Chartered Institute of Bankers of Nigeria (CIBN).

    The NDIC Boss said bank examination reports had indicated that the high incidences of fraud and forgeries in the banking system had been linked to outsourced or contract staff.

    Umaru also said that in as much as regulators appreciated the necessity for banks to cut costs, it was incumbent on all stakeholders to fashion out capacity building and other strategies to motivate all employees to contribute positively rather than engaging in criminal acts that impact adversely on the entire banking system.

    The NDIC CEO also expressed concern about the plight of female employees in the banking industry. He noted that banks often engaged female employees and set for them very high targets on deposit mobilisation and other asset creation ventures, which put undue pressure on the female employees.

    According to him, although some improvement had been recorded with regards to the situation, there was still need to provide a more conducive working environment in order to attract and retain a talented female workforce in the sector.

    The President of the Institute, Mrs Debola Osibogun regretted that over 75 per cent of fraud cases in the sector had been traced to outsourced bank staff who were neither professionals nor members of the CIBN.

    While noting that the Institute had no control over the banks, she disclosed that a Committee of the Institute was already working with heads of operations of banks on the challenges being posed by the outsourced staff and would soon submit its report to the Central Bank of Nigeria (CBN) for consideration.

    The CIBN President also said the Institute had been mandated as the agency for competency framework for banking industry by the CBN, adding that the CIBN had visited banks’ academies and had issued accreditation certificate to the academies of the FirstBank, Access Bank and Guaranty Trust Bank.

  • NDIC worried over poor awareness of its activities

    NDIC worried over poor awareness of its activities

    The Nigeria Deposit Insurance Corporation (NDIC) has expressed concern over the poor public awareness of its mandate.

    Addressing journalists in Abuja yesterday at the end of the opening ceremony of a seminar for external Solicitors of the NDIC, the Managing Director, Alhaji Umaru Ibrahim, observed with concern that a large segment of the Nigerian public has a wrong perception about the Corporation and its statutory mandate.

    Umaru lamented that “one of the major challenges confronting the Corporation in the discharge of its mandate, is public awareness. We have observed with concern that the Nigerian public has a misconceived perception of the corporation and its functions.”

    He said in tackling this challenge, NDIC has “invested valuable resources in ensuring that this negative trend is reversed in line with its strategy of enhancing public awareness.”

    He said the corporation  supported the seminar with the theme, ‘Challenges to Deposit Insurance Law and Practice in Nigeria,’ as part of its efforts to sensitise stakeholders on the practice of deposit insurance.

    This is what prompted the corporation to invest resources to reverse the trend through effective and continuous public awareness and close collaboration with key stakeholders, he said.

    Umaru noted that NDIC would continue to collaborate with the Judiciary to ensure the effective discharge of its mandate and its continued contribution to financial system stability in the country.

    According to him, “matters of litigation have always been problematic generally, and it’s the entire judicial process that made it so and not peculiar to the NDIC and having gone through this program, the judges and the lawyers, I believe will better understand the issues involved.”

    Giving the length of time it takes to get court rulings on matters relating to deposit insurance and other matters, the NDIC boss disclosed that “while the litigation process in the court is slow, the corporation is currently taking advantage of the Alternative Dispute Resolution mechanism to get justice.”

    Umaru said the NDIC “requires speedy dispensation and requires a lot of understanding on the part of the judges as well as the lawyers and what we tried to do is to use the alternative Dispute Resolution mechanism instead of having a prolonged litigation process,” he stated.

  • NDIC: Feeling the pulse of Nigeria’s economy

    ncreasingly, analysts and the Nigerian public are looking up to the annual report of the Nigerian Deposit Insurance Corporation (NDIC) to grasp the true situation of the nation’s economy, especially from the perspective of the banking sector. The 2014 report is out and remains as pungent as ever. Knowing how its report has become critical in decision-making, NDIC expectedly attaches much importance to the report.

    Ideas are only interesting if they lead to results. The idea of deposit insurance in Nigeria is blossoming year after year. The overall verdict of the 2014 annual report pronounces a positive outlook of the economy:  “The banking industry performance and level of soundness in 2014 indicated that 23 Deposit Management Banks (DMBs) were rated sound and satisfactory; only one DMB was rated marginal during the period under review. Overall the banking industry was safe and sound in 2014” – the report asserts.

    The barely two-month old administration of President Muhammadu Buhari is very likely to welcome the report for the assurance that the administration has not much to worry about in the fundamentals. So he’ll be able to concentrate his energies on tackling corruption and other financial crimes. He will do well to give special attention to the cyber variant of financial crime that has reared its ugly head in the banking sector. As the report shows, a whopping N6.2 billion was lost by depositors and banks in 2014 to cyber crimes with the majority of cases related to internet banking and ATM scams. According to the report, the total number of such scams grew astronomically from 3,786 cases in 2013, to 10,612 cases in 2014. While it involved about ¦ 25.61billion in 2014 (compared to N21.80billion the previous year), the actual loss was N6.19 billion.

    This is obviously a worrying signal that has the potential to erode the confidence of account holders and scare away those yet to enter the banking net. Nigeria, with 170 million population, has only about 28.5 million adult bank accounts holders. In February 2014 the Central Bank of Nigeria (CBN) introduced Bank Verification Numbers (BVNs), an initiative which obliges customers to do biometric registration and obtain a unique number for proper identification, which is part of measures to stem bank account fraud. By the end of June when the deadline for obtaining the number expired, only around 12 million account holders had complied.

    On a positive note, the report reveals that total loans and advances granted by banks across the country climbed from ¦ 10.04 trillion in 2013 to ¦ 12.63 trillion in 2014. The report is however quick to point that, despite significant improvements in banking industry’s asset quality, the volume of non-performing loans rose from ¦ 321.66 billion in 2013 to ¦ 354.84bn in 2014. But it allays any fears by stating that the ratio of the bad debts to total loans is within the regulatory threshold of five percent. Accordingly “all the DMBs in the industry had liquidity ratios in excess of the minimum prudential requirement of 30 per cent, as at 31st December 2014, indicating that all DMBs were sufficiently liquid”, the report says.

    The NDIC, as part of its mandate, carried out the risk assessment of all deposit banks in collaboration with the Central Bank of Nigeria to provide reliable information on the banks’ risk assets quality, adequacy of loan loss provisioning and capital adequacy positions. And the result is something quiet promising: the assessment reveals that 15 banks have  ”high” and “above average” composite risk rating, while eight others had “low” and “moderate” rating, showing their level of compliance with banking rules and regulations, their risk appetite and the adequacy of their risk management frameworks.

    Credit risk, one of the many types of risks banks are exposed to, has a significant impact on the profitability of Nigerian banks. Therefore, while on the one hand the regulatory bodies (CBN, NDIC etc.) need to be cautious in setting up a credit policy that might negatively affect profitability,  on the other hand, the banks’ boards also need to know how credit policy affects the operation of their banks to ensure judicious utilisation of deposits. After all, approaches to risk management in general have changed across organisations and the whole world in recent times, as economists have observed. This necessitates  the recognition by many business leaders that risks are no longer mere hazards to be avoided – they also, in many cases, constitute opportunities to be embraced.

    This balancing act can be seen in the result of the report on credit distributions in the 2014 NDIC annual report. The report said the oil and gas sector led the banking industry sectoral credits distribution, accounting for 25.74% of the top 10 of 22 sectors of the economy that accounted for 87.35% of total credits, compared with 81.99% in the previous year.  The manufacturing sector was next with 13.19%, while the other sectors accounted for 12.65%, as against 18.01% of the total credits extended by the DMBs in 2013.

    NDIC’s achievements in the financial sector also include the Memorandum of Understanding (MoU) signed between it and the Poland-based Bank Guarantee Fund (BFG) in 2014. The issues included cooperation around Cross Border Supervision; Cross Border Resolution Colleges; Early Warning Models and Macro Prudential policy etc. Similarly, the World Bank granted technical assistance to the NDIC for development of Target Fund Ratio Framework. The assistance will enable the NDIC determine adequacy of its Deposit Insurance Fund (DIF) as well as address the deficiencies identified during the 2011 assessment of its compliance with the International Association of Deposit Insurers (IADI) Core Principles for effective Deposit Insurance System (DIS).

    At the regional level NDIC is in the forefront of the effort to articulate a collective vision for the continent. This was displayed at the Kenya meeting of the African Mobile Phone Financial Service Policy Initiative (AMPI) roundtable on the future of mobile phone financial services in Africa. Clearly, this is a fast growing area of e-commerce that needs effective regulation, especially with the vulnerability of the web-based platforms. With the speed at which telecommunication is evolving and breaking barriers to sharing information and accelerating collaboration across different markets, the role of regulatory bodies has become, more than ever before, imperative and urgent.

    The report also reminds the public of the state of the NDIC’s efforts at seeking the bill for the repeal and re-enactment of the NDIC Act 2006, which was pending before the just concluded 7th National Assembly and had scaled through second reading and was subjected to public hearing. One of the major issues contained in the proposed amendment is granting the NDIC power to pay insured amounts to depositors in the event of imminent or actual suspension of payment by an insured institution before the revocation of its licence. This is to forestall legal actions such as the ones shareholders of Fortune International Bank Plc. and Triumph Bank Limited instituted challenging the revocation of their licences, which is still pending in court.

    The bill generated unnecessary furore from unsuspecting quarters last year. But the 8th National Assembly needs to urgently look at the bill with a view to giving it speedy consideration, in view of the need to bolster the powers of the NDIC to carry on with its enormous work of protecting depositors by providing an orderly means of compensation in event of failure of insured financial institutions in line with international best practice. Surely, NDIC contributes to the financial stability of the economy through its function of assisting monetary institutions in formulating and implementing banking policy. It has a lot to achieve if given the correct measure of power. Its annual report is now the stethoscope the public confidently uses to take the pulse of the banking sector.