(May 28, 2009) It was reported on May 21, 2009, that the Nigerian National Assembly is working on amending the Nigeria Deposit Insurance Corporation (NDIC) Act of 1988, a law that established and regulates the powers of the NDIC. The intent of the legislature is to expand the NDIC powers, to enable it to take prompt actions in the event of bank failures and to safeguard depositors' interests at such times.
In an appearance she made at an event marking the 20th anniversary of the NDIC, the chairman of the Nigerian Senate Committee on Banking, Insurance, and Financial Institutions, Senator Nkechi Nwogu, criticized courts for playing a part in delaying the process of liquidating failed banks and causing bank customers to suffer long, drawn-out litigation to recover their deposits. Nwogu stated that “we want NDIC to give people their money immediately [in the event that] a bank fails.” Nwogu added, “the Senate is embarking on amendment of the NDIC Act to give them [bank depositors] better teeth to bite and chew those perpetuating these failures.” (Kunle Aderinokun, Bank Failure: N' Assembly to Accord NDIC More Power, THIS DAY, May 22, 2009, available at http://www.thisdayonline.com/nview.php?id=144000.)
Currently the functions of the NDIC under the law are:
· insuring all deposit liabilities of licensed banks and other financial institutions operating in Nigeria;
· giving assistance in the interests of depositors in the case of imminent or actual financial difficulties of banks, particularly where suspension of payment is threatened, and avoiding damage to public confidence in the banking system;
· guaranteeing payments to depositors in case of imminent or actual suspension of payments by insured banks or financial institutions, up to the maximum amount as provided for [by law, which is NGN50,000 (about US$340) under the Act];
· assisting monetary authorities in the formulation and implementation of banking policy, so as to ensure sound banking practice and fair competition among banks in Nigeria; and
· pursuing any other measures necessary to achieve the functions of the corporation, provided such measures and actions are not repugnant to the functions of the NDIC. (§5, Nigerian Deposit Insurance Corporation Act, Cap. N102, 12 LAWS OF THE FEDERATION OF NIGERIA (LexisNexis Butterworths, through Mar. 2006) (official source).)
It is not yet clear how far the amendment will go in expanding the functions of the NDIC.