History of NDIC
The brief history of Nigerian deposit insurance corporations can be traced from the bank regulatory agency. This is to enable us to detect and appreciate the role, function, and activities of the agency. However, the Nigerian Deposit Insurance Corporation NDIC Decree 22 of 1988, established Nigerian Deposit Insurance Preparation.
Decree No 22, which was brought into operation of NDIC, was repealed by the Nigerian Deposit Insurance Corporation Act No 16, 2006 ( NDIC ACT NO 16, 2006), NDIC operation kicked off effectively in February 1989.
The effective establishment of NDIC was actually the combined effort of the committee organized by the Federal Government and Central Bank of Nigeria (CBN) to properly examine the operations of the banking system in Nigeria. The Committee in its Report recommended the establishment of a Depositors Protection Fund (DPF).
As time goes on, the Nigeria Deposit Insurance Corporation was established through the promulgation of Decree No. 22 of 15th June 1988. NDIC started with an authorized capital of 100 Million. AS a government-owned corporation, the federal government contributed 40% of the start-up capital while the central bank of Nigeria (CBN) contributed 60% of the capital.
The Nigerian Deposit Insurance Corporation (NDIC) was established with the primary objective of assisting the central bank of Nigeria (CBN) and other monetary institutions in regulating and supervising Nigerian financial and banking activities. As one of the regulatory frameworks of the banking system, NDIC was basically mandated to incur deposit liabilities of all licensed banks operating in the industry.
The corporation also gives terminal and financial assistants to banks with liquidity problems. It is very important to note that Nigeria was not the first country to practice a Deposit Insurance Corporation, However, the first country to start the practice of Deposit Insurance system was the United States of America (USA) as at 1930 after the great depression trouble which led to the failure of over 9,000 banks in the United State of America.
Although there are many models of the deposit insurance systems, the prevalent the world over, Nigeria’s model was imported from the United State of America. Which helps to restore the confidence of any failing or already failed financial institution and ensure they bounce back to normal. All you need to know about Nigerian Deposit Insurance Corporation (NDIC) | History| Meaning & Function are contained in this article, Read.
Meaning of NDIC
The Nigerian Deposit Insurance Corporation (NDIC) can be defined as a government-owned corporation established with the purpose of assisting the central bank of Nigeria and other monetary authorities in regulating, supervising the Nigerian banking and financial system.
It is an independent agency of the Federal Government of Nigeria with a defined objective of protecting depositors and facilitating the payments of insured premium when a deposit-taking financial institution can no longer repay their deposits, by ensuring proper maintenance of financial stability.
Meanwhile, it is the mandate of NDIC to give terminal and financial assistance to banks with liquidity problems.
Functions of NDIC
1. The NDIC was established to protect the banking system against any damaging banking runs.
2. NDIC helps in protecting depositors’ funds, particularly the small income earners or the small income savers who are unlikely to have access to sufficient information that will enable them to evaluate the solvency of the banks they hold there savings,
3. NDIC gives assistants to insured institutions in the interest of depositors, in case of unexpected or actual financial challenges, particularly where suspension of payments is injected to avoid damage to public confidence in the banking industry.
4. NDIC helps the monetary authorities in the proper formulation, documentation, and implementation of banking policies so as to ensure a sound and reliable banking practice in the country.
5. To ensure a transparent and fair play amongst the competing financial institutions and thus, lead to their innovations and efficiency of operation.
6. NDIC plays the role of protecting depositors’ funds and facilitating the payments of insured premium when a deposit-taking financial institution can no longer repay their deposits, by ensuring proper maintenance of financial stability.
Board Members of NDIC Agency Includes
1. The managing director (MD)
2. The executive director (ED)
3. The representative of the finance ministry and economic developments
4. The Governor of the Central Bank of Nigeria is also the chairman of the board.