Government Agencies

Deposit Insurance Corporation (NDIC)

The Nigeria Deposit Insurance Corporation was actually established for specific mandate. As an insurer, the Nigeria Deposit Insurance Corporation, has a mandate of implementing the Deposit Insurance Scheme DIS.
The Corporation was designed to minimize risk with a couple of mandate, which I am going to discuss in this article. What were this mandate of the Nigeria Deposit Insurance Corporation? Someone may ask!

Mandate Of The Nigeria Deposit Insurance Corporation

Read Also: The role of insurance in the Nigerian economy

Deposit Insurance Corporation (NDIC)
Federal Deposit Insurance Corporation – Photo Source: http://inlandpolitics.com
As I said earlier, I am about discussing the mandate of the Nigeria Deposit Insurance Corporation, and here are they:

1. Guarantees of Deposit

Deposit guarantee is one of the mandate of the Nigeria Deposit Insurance Corporation, and this particular mandate is considered as the most significant of all the mandate of the Nigeria Deposit Insurance Corporation.
It is also one of the district activities of the Nigeria Deposit Insurance Corporation. Therefore, it is the duty of the Nigeria Deposit Insurance Corporation to make sure that, deposit payment is guaranteed.
And the Corporation can only guarantee same, if the deposit payment meets the maximum limit, and it must be done in line with the statue of the transaction, in the event, where an insured financial house failed.

2. Supervision of Banks

Another mandate of the Nigeria Deposit Insurance Corporation is to supervise banks, and the reason of this supervision is obvious.
It is one of the mandates of the Nigeria Deposit Insurance Corporation to make sure that, banks are supervised with a view to ensure protection of depositors.
Fostering monetary stability is one of the object of the supervision of banks by the Nigeria Deposit Insurance Corporation, as well as, promotion of effective and efficient system of payment, including promotion of innovations and competitions within the banking system.
This is quite important and necessary, if the Nigeria Deposit Insurance Corporation must achieved the purpose to which, it was set up.
Supervision of banks by the Nigeria Deposit Insurance Corporation is considered as an essential element of the scheme, that is, the Nigeria Deposit Insurance Scheme.
Being an essential element of the scheme, banks supervision however, seeks to reducing potential risk that may lead to failure, and as well, help in making sure that unsound and unsafe practices in the banks do not go on without checking.

3. Resolution of Failure

One of the major mandates of the Nigeria Deposit Insurance Corporation is to make sure that institutions that are failing and/or failed institutions are duly resolved, whenever there is such situation. The resolution is expected to be timely, and be done as efficiently as possible.

4. Liquidation of Banks

The last mandate of the Nigeria Deposit Insurance Corporation I will love to discuss in this article will be that of the bank liquidation.
Liquidation of banks is one of the options adopted by the Nigeria Deposit Insurance Corporation for those banks that have failed to meet the measures set up for failure resolution.
To carry out bank liquidation process, the failed institutions must be closed down efficiently and orderly, although, this will disrupt the banking system, however, there would be minimum settlement of claims to depositors and to creditors, and possibly to the stakeholders as the case may be.

Functions Of The Nigeria Deposit Insurance Corporation

The Act that established the Nigeria Deposit Insurance Corporation, Act 2006, is very glaring about the functions of the Nigeria Deposit Insurance Corporation.
This is however, found in Section 2, Act 2006 of the Nigeria Deposit Insurance Corporation. And these functions are as discussed below:

1. Insures All Deposit Liabilities Of Licensed Banks

Insurance of every deposit liability bank, that are licensed is one of the functions of the Nigeria Deposit Insurance Corporation.
Therefore, it is expected of the Nigeria Deposit Insurance Corporation to ensure that all deposit liabilities banks that are licensed are well insured.
This function of the Nigeria Deposit Insurance Corporation is not limited to the deposit liabilities of licensed banks alone, its function also include insurance of other financial houses, which in most cases, are considered ‘insured institutions’.
This institutions are those that are operating within Nigeria, and must operate in accordance with the provision of Section 16 and Section 20 of the Nigeria Deposit Insurance Corporation Act.
The purpose of insuring every deposit liability bank that is licensed is to ensure that confidence is brought into the system of banking in Nigeria.

2. Gives Assistance To Insured Institutions

One of the functions of the Nigeria Deposit Insurance Corporation is to make sure that assistance is given to every insured institution.
Why assistance is being given to insured institutions is very significant, and the purpose is to protect the interest of the depositors.
Therefore, in a situation, where these insured institutions are suffering or about to suffer financial difficulties, it is expected of the Nigeria Deposit Insurance Corporation to step in and proffer solution in form of giving financial assistance to these insured institutions.
In most cases however, insured institutions may experienced such financial difficulties, whenever there is suspension of payment threat.
So to avoid betraying the trust of the public, and soiling the reputation of these insured institutions, the Nigeria Deposit Insurance Corporation has to do something otherwise, the public confidence in the banking system can be damaged, and this may not occur well to the banking system.

3. Guarantees Payments To Depositors

One of the functions of the Nigeria Deposit Insurance Corporation is to make sure that payments to depositors are guaranteed.
That is why, the Nigeria Deposit Insurance Corporation has to guarantee payments to depositors, once there is signal of imminent suspension of payment threat or say, in the case where there is actual suspension of payments.
This suspension of payments by insured institutions may perhaps meets the maximum, according to the provision of Section 20 of the Act of the Nigeria Deposit Insurance Corporation.

4. Assists Monetary Authorities In Formulating And Implementing Policies

The Nigeria Deposit Insurance Corporation also saddled with the responsibility of formulating policies, as well as, implementing these policies.
In this case, the Nigeria Deposit Insurance Corporation will have to assist monetary authorities in the formulation of policies and in the implementation of these policies also.
This is important, since the formulation and implementation of policies will help in ensuring that, there is sound and efficient practices in the banking system. It will also encourage fair competition between and among insured financial institutions in Nigeria.

5. Pursues Any Other Measures Deemed Necessary To Help Carry Out Its Functions

The Nigeria Deposit Insurance Corporation also pursues some other measures necessary for it to attain the functions of the Nigeria Deposit Insurance Corporation.
But the Corporation must be careful that such measures  are not inconsistent to the objectives of the Nigeria Deposit Insurance Corporation.

Conclusion

As an insurer, the Nigeria Deposit Insurance Corporation, has a mandate of implementing the Deposit Insurance Scheme DIS.

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Joseph Athanasius

Joseph Athanasius is a Content Developer at InfoGuideNIgeria.com. InfoGuide Nigeria is a team of Resource Persons and Consultants led by Ifiokobong Ibanga. Page maintained by Ifiokobong Ibanga. If you need a personal assistance on this topic, kindly contact us.

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