The
Central Bank of Nigeria, Nigerian Deposit Insurance Corporation and
other stakeholders on Monday failed to agree on who should have full
control over the supervision of banks in the country and guarantee the
safety of depositors’ funds.
The House of Representatives is repealing
and re-enacting the NDIC Act, 2006 to provide for the protection of
depositors’ funds in banks.
However, at a public hearing on the bill
to repeal and re-enact the Act organised by the House Committee on
Banking/Currency, the CBN argued that the NDIC could not assume full
supervision of the banks without reaching an agreement with it.
The CBN’s Director of Banking
Supervision, Mrs. Tokunbo Martins, who gave the bank’s position, said,
“The NDIC must have an agreement with the CBN before it can supervise
the banks.”
Martins stated that the CBN had yet to
come to terms with the real reasons the NDIC was backing the repeal of
its Act, adding that the central bank would later submit a comprehensive
response to the committee.
“There can never be two captains in the
same ship as the NDIC cannot be on self-employment as a liquidator of
banks, deposit insurer and bank supervisor without an agreement with the
CBN,” she said.
But the NDIC and other stakeholders
opposed the CBN, saying that the corporation could supervise as well
liquidate banks if the present Act was repealed and re-enacted.
For example, a former Managing Director,
NDIC, Mr. Ganiyu Ogunleye, held the view that rather than pursue a
narrow route, the central bank should take a broader appreciation of the
proposed law.
“This is inappropriate as we are all agencies of government working towards a common goal,” he said.
The Managing Director, NDIC, Mr. Umaru
Ibrahim, told the committee that the proposed amendment of the Act would
make the corporation to post better results in the future.
He stated, “Mr. Chairman, please permit
me to state for the purposes of emphasis that the NDIC was established
by Decree No. 22 of 1988, now the NDIC Act, 2006 to operate the Deposit
Insurance Scheme in Nigeria.
“A deposit insurance scheme is a
financial guarantee established to protect depositors in the event of a
bank failure and also to offer a measure of safety for the banking
system. The deposit insurance scheme forms part of the financial safety
net necessary to reduce the risk of severe financial crises.
“Without an appropriate financial safety
net, problems regarding solvency or liquidity of a financial institution
have the potential of turning into a full blown financial crisis. With
an appropriate financial safety net in place, depositors’ confidence is
enhanced and the likelihood of financial crises is reduced to the barest
minimum.”
The Fiscal Responsibility Commission and
civil society organisations were among other agencies and groups that
supported the bill.
On his part, the Speaker of the House,
Mr. Aminu Tambuwal, was optimistic that “the amendment will shore up
investors’ confidence and enhance the personal fortunes of Nigerians
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