Posted by Sam Akpe and Gbade Ogunwale on
The compensatory claim of depositors in any failed bank may be raised from N50,000 to N200,000.
The compensatory claim of depositors in any failed bank may be raised from N50,000 to N200,000.
If the licence of the bank is revoked by the regulatory authorities, however, the maximum claim from the Deposit Insurance Fund will be N100,000.
However, the claim will be subject to periodic review by the Nigeria Deposit Insurance Corporation, which manages the DIF.
These are some highlights of the new NDIC Act considered by the Senate on Thursday for passage into law based on the report of its ad-hoc committee.
While the Senate passed all the provisions, the bill was deferred for further consideration of Section 40(7), which deals with courts permitted by the constitution to handle matters of original jurisdiction against the NDIC.
The NDIC was established in 1988 to insure the deposits in licensed banks subject to a maximum of N50,000 per depositor.
The Senate agreed on the need to review the amount 'in view of changes in macroeconomic variables and the need to sustain public confidence and ensure the stability of the banking system."
Preambles to the new law show that the new amount covers 96 per cent of total depositors in the Nigerian banking in the industry and 42 per cent of the total volume of deposits in the industry as revealed by the banking survey conducted in September, 2004.
It noted that the new claim being recommended 'was 3.5 times the per capita income in Nigeria based on the 2004 figure of the country's per capita income of about $408."
It, however, stated that any further upward adjustment could only take place if DIF becomes larger through increased premium collection
The new law seeks to improve the efficiency of the NDIC in protecting depositors of insured institutions and in promoting safe and sound banking practices through effective supervision.
It will also ensure that the NDIC discharges its functions of deposit guarantee and liquidator of closed banks in a timely, less costly and efficient manner, thus engendering public confidence in the banking system.
The law, which repeals the NDIC Act of 1988, also seeks to harmonise the provisions of the Central Bank of Nigeria Act of 1991 and Banks and Other Financial Institutions Act of 1991, which brought all the banking matters under the supervision of the CBN.
Previously, the Federal Ministry of Finance had overall responsibility for the supervision of banking business in Nigeria.
The new law also restores to the NDIC, the legal authority to act as a receiver instead of the status of a liquidator conferred on it by the Banking and Other Financial Institutions Act that has been repealed.
The law has a new provision that also affirms that only the NDIC can insures all licensed banks' deposits.
Also in the new law is the period during which victims of failed banks could submit their claims for payment of insured deposit beyond the 18 months stipulated in the existing Act.
The new law states that notices for claims shall be published in two national newspapers and that the period of claim or transfer of deposit will span six years.
The proposed law also establishes prompt corrective measures to check imminent bank distress based on findings from examination of banks, among others.
The Punch, Friday November 25, 2005