Financial services

NDIC and CBN are praised by FG ​​for creating a resilient financial services sector

The Federal Government has given passing grades to the Nigeria Deposit Insurance Corporation (NDIC) and the Central Bank of Nigeria (CBN) for maintaining the resilience of the country’s economy despite turbulent economic headwinds.

He observed that the Nigerian economy, like others, has felt the brunt of global economic distortions, having slipped into recession twice in the space of five years, pointing out that it was protected by the resilience of the financial system of the country, which brought it out of recession in a few months.

The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, on Tuesday in Abuja at the 2022 Workshop of the African Regional Committee of the International Association of Deposit Insurers (IADI) organized by the Nigeria Deposit Insurance Corporation (NDIC) on the theme: ”Normality in turbulent times: the stabilizing role of deposit insurance.

The Minister noted that despite the challenges that have beset the economy, no depositors’ funds have been lost due to the efficiency of the financial sector regulators, most notably the CBN and the NDIC.

Speaking on the important role of the banking sector, she said, the sector remains essential in supporting the real sector through the provision of innovative products and services to all relevant stakeholders.

Ms Ahmed, however, said the fiduciary nature of banking, coupled with heightened socio-economic challenges across the world, had increased the risk of bank failure, with significant implications for depositor losses and erosion of liquidity. public confidence in the banking system.

According to her, “the negative impact of these challenges on economic growth and financial sector stability in most economies around the world, has raised a number of questions regarding the role of the deposit insurance scheme (DIS) in the contribution to the stability of the financial system.

“It also demonstrated the important role played by the deposit insurance system, as a component of financial safety net schemes in most jurisdictions around the world, given that depositor protection is an essential element necessary for the maintaining and restoring financial stability.

“The Nigerian economy, like others, has felt the brunt of global economic distortion, having had to go into recession twice in the space of five years. However, given the resilience of the country’s financial system, we We are also bold to say that despite these economic challenges, no depositor funds have been lost given the efficiency of our agencies, most notably CBN and NDIC.

Ms. Ahmed described the choice of theme as appropriate, informative and relevant in light of the recent socio-economic challenges that have continued to undermine the security and stability of the financial system across the world, heightened by the lingering effects of the coronavirus pandemic. COVID-19, the Russian-Ukrainian war, global supply disruptions and the challenges of climate change.

She noted that these pose a myriad of challenges and risks to the security and stability of the global financial system, and urged participants to thoroughly discuss more specific issues, such as the role of the insurer of deposits in contingency planning and crisis management, among others.

Central Bank Governor Godwin Emefiele in his goodwill message said Nigerian banking sector regulators have put in place proactive mechanisms to deal with systemic issues in the financial sector.

He added that the CBN and the NDIC were working in synergy in developing policy guidelines for the protection of the banking sector.

NDIC Board Chair, Ms. Ronke Sokefun, said in her remarks that the workshop was organized by the Society to serve as a forum to dissect relevant issues, share experiences, compare notes and improve the participants’ understanding of “the role of deposit insurers in early detection and timely intervention; contingency planning and crisis management; a stress test to build operational resilience and a contingency planning framework for a system safer and more resilient financial institution that supports sustainable economic growth in every jurisdiction.

“The presence of global experts from fiscal, monetary, supervisory and regulatory agencies, and deposit insurers in a gathering such as this, is a manifestation of our commitment to having a robust and sustainable system capable of detecting the problems early enough and manage the crisis adequately in the banking system to promote the stability of the financial system,” she said.

NDIC Managing Director and CEO Mr. Bello Hassan said that NDIC provides deposit insurance protection to depositors at 33 depository banks (DMBs) comprising 24 commercial banks, 6 commercial banks and 3 interest free banks. (NIB) and 882 microfinance banks (MFB). ); 34 Primary Mortgage Banks (PMBs); 3 payment service banks (PSBs) and 29 mobile money systems.

Hassan noted that the NDIC has adopted different resolution mechanisms to resolve the failure of troubled depository financial institutions in the country.

“NDIC’s liquidation activities concerned 467 banks insured in liquidation, including 49 DMB, 367 MFB and 51 PMB, as of end-December 2021.

“The successes recorded by the NDIC in carrying out its mandate would not have been possible without the strong support and collaborative efforts of other financial safety net actors in Nigeria, such as the CBN, the Federal Ministry of Finance, Budget and National Planning and other FSRCC members,” he said.

Hassan reiterated that the NDIC is a member of the FSRCC, an inter-agency body set up to coordinate the supervision of financial institutions and address issues of common interest and concern among the various regulatory and supervisory authorities in the financial services sector. Nigerians.