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NDIC says Federal Government’s 50% cost-to-income deduction limits its ability to strengthen Deposit Insurance Fund (DIF).
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Managing Director urges exemption to ensure readiness for potential bank failures while maintaining compliance with fiscal laws.
- Ministry of Finance pledges support, emphasizing NDIC’s role in safeguarding depositor confidence and financial stability.
The Nigeria Deposit Insurance Corporation (NDIC) has expressed concern that mandatory fiscal deductions by the Federal Government are constraining its ability to build a strong Deposit Insurance Fund (DIF).
NDIC Managing Director/CEO, Mr. Thompson Oludare Sunday, disclosed this during a courtesy visit to the Managing Director of the Ministry of Finance Incorporated (MOFI), Dr. Armstrong Takang.
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Sunday explained that the government’s 50% cost-to-income policy reduces the funds available for NDIC to respond effectively in the event of bank failures.
He stressed that international standards from the International Association of Deposit Insurers (IADI) require deposit insurers to maintain adequate resources without relying on government support.
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“The current deductions undermine NDIC’s capacity to maintain a robust fund for depositor protection,” he said, noting that the Corporation is seeking exemptions to improve its preparedness for potential banking sector distress.
Despite the concerns, Sunday emphasized NDIC’s strict compliance with statutory financial obligations, including remittances of 20% of gross earnings or 80% of net surplus to the Federal Government.
He also highlighted the Corporation’s timely submission of financial statements and adherence to the Fiscal Responsibility Act (FRA) 2007.
In response, MOFI CEO Dr. Takang praised NDIC’s transparency and fiscal discipline, pledging continued support to ensure the Corporation can fulfill its mandate.
He underscored that a strong NDIC is vital for maintaining depositor confidence and overall financial system stability.
NDIC also reminded that deposit insurance premiums, now covering deposits up to N5 million, are statutory payments by banks to guarantee depositors’ funds in the event of financial institution failures.
