The Nigerian Senate, during its Tuesday session, approved the “Nigeria Deposit Insurance Corporation Act 2023,” a bill designed to boost the Nigeria Deposit Insurance Corporation’s (NDIC) capabilities in safeguarding depositors’ funds and strengthening financial institutions across Nigeria.
This approval came after the Senate reviewed a report from the Committee on Banking, Insurance, and Other Financial Institutions.
The bill, sponsored by Senator Adetokunbo Abiru (APC-Lagos) and endorsed by all committee members, aims to enhance the NDIC’s independence and efficiency, aligning it with modern standards and best practices.
In his remarks, Abiru highlighted that the legislation reinforces the NDIC’s effectiveness by affirming its autonomy and updating its governing structure to improve Nigeria’s financial system.
A key provision of the bill is consolidating the President’s authority to appoint the NDIC’s Chairman and board members.
Previously, the Central Bank of Nigeria (CBN) recommended appointees to these positions, but under the new legislation, the CBN’s role will shift toward overseeing the NDIC’s operations rather than influencing appointments.
Senator Abiru commented, “The Nigeria Deposit Insurance Corporation (Amendment) Bill, 2024, is a crucial piece of legislation aimed at fortifying the Nigerian financial system.
The proposed amendments will enhance the NDIC’s ability to protect depositors, stabilize financial institutions, and foster trust in the banking system. Given the rapidly changing financial sector, this Bill is a timely response to current and future challenges.”
The bill also strengthens the NDIC’s autonomy by amending Section 1 (3) of the principal Act. Previously, the President’s authority to appoint the NDIC’s Managing Director and Executive Directors was limited by the CBN’s recommendations, but this provision has now been revised to align with the President’s constitutional appointment powers under the 1999 Constitution.
Additionally, the bill alters the provision that designated the Permanent Secretary of the Ministry of Finance as the NDIC Board Chairman, citing the heavy workload of that office.
“To further empower the NDIC by ensuring its independence in performing statutory functions as outlined in Section 1 (3) of the principal Act, the 2024 bill seeks to amend the previous provision,” Abiru said.
“This brings it into line with the President’s constitutional appointment powers. The previous Act also made the Permanent Secretary, Ministry of Finance, the Board Chairman—a role which, due to the workload of the office, is impractical.”
The bill introduces another significant measure requiring the Minister of Finance to appoint an Interim Management Committee for the NDIC within 30 days if the board’s term ends or is otherwise terminated.
This provision is meant to prevent disruptions in the NDIC’s operations, following recent challenges faced by the corporation due to the absence of a board.
Abiru added that there was broad agreement among stakeholders on the NDIC’s essential role in protecting depositors and guaranteeing the settlement of insured funds, which is vital for the stability of Nigeria’s financial system.
“Given these considerations, the general consensus among stakeholders is that updating the legal framework is necessary.
This will make the corporation more effective in fulfilling its role, safeguard its independence, and align it with current global standards and practices. The corporation plays a crucial role in protecting depositor interests and fostering confidence in the financial sector.”
Abiru concluded that the bill’s provisions address the complex challenges posed by both domestic and international banking environments, ensuring the NDIC remains capable of meeting its objectives.
Plateau News