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Published On: Mon, Jul 14th, 2014

NDIC explains position on alleged liquidation of insurance companies

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NDICThe Nigeria Deposit Insurance Corporation (NDIC) at the weekend denied some newspaper reports that the Corporation was seeking powers to liquidate insurance companies and (or) terminate the insurance firms’ licences.

It said the above misrepresentations were published in some national dailies on Wednesday, 9th July 2014 with the captions: ‘’ CBN rejects moves to empower NDIC to liquidate Insurance Companies’’, ‘’ CBN faults proposed NDIC powers to liquidate insurance companies’’ and ‘’CBN challenges NDIC over insurance companies liquidation’’ among others.

A statement by the Head, Communication and Public Affairs, NDIC, H.S.Birchi said the erroneous publications were sequel to the public hearing held on Tuesday, 8th July 2014 by the House of Representatives Committee on Banking and Currency.

The statement said, “As a deposit insurer and liquidator of insured deposit taking financial institutions, the liquidation of insurance companies does not fall under the purview of the Corporation.

“The Corporation wishes to make it categorically clear that its proposed amendments bill which is before the National Assembly does not seek for powers to liquidate insurance companies or terminate the insurance firm’s licenses as erroneously published in the national dailies.

“The Nigeria Deposit Insurance Corporation was established in 1989 vide the NDIC Act of 1988 with powers among others to supervise insured institutions, resolve banks distress conditions and to act as liquidator of closed insured financial institutions whose licences have been revoked.

“These powers were not only retained by the NDIC Act 2006 which replaced the NDIC Act of 1988 but were strengthened for greater effectiveness. The NDIC Act of 2006 had enabled the Corporation to collaborate effectively with the CBN in resolving banking crises in Nigeria, particularly the crises of 2009.

“However, emerging challenges after the crises as well as the experience garnered in the operation of deposit insurance in Nigeria in the past twenty-five (25) years have necessitated the need for a further review of the 2006 Act in order to empower the Corporation to address the emerging challenges.  The proposed amendments are therefore to enable the Corporation discharge its mandates effectively and efficiently.

The statement gave some of the amendments and or new provisions being proposed are:  “Prompt payment of insured deposits following failure of an insured institution by reducing time of reimbursement (payment to depositors) from 90 days to 60 days;

“Powers to deal with parties at fault i.e. Directors and officers who caused the failure of an insured institution; “Power to reimburse insured depositors notwithstanding pending court suits; “Prevention of execution of judgement against the assets of the Corporation (as body corporate) for a liability of a failed insured institution; “Limitation of court orders aimed at preventing the Corporation from carrying out its statutory functions of deposit protection; “Enhancing corporate governance practices in the Corporation “Increase funding for the Corporation to be able to carry out its core mandate of depositor protection; and “To enhance debt recovery efforts by the Corporation.

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