Engaging the NDIC executives

Lagos has assumed a whitish mien this Saturday morning, an indication that Harmattan has gotten its hold on the bustling city. It was neither cold nor hot, but the atmosphere was exuberant at the magnificent Providence by Mantis Hotel, Ikeja GRA, where once more the Nigerian Deposit Insurance Corporation (NDIC), was hosting senior editors of the Nigerian media and a selection of their writers to an all-day engagement.  To my knowledge, the NDIC is one of the few among the key players of our financial safety-net institutions that faithfully keep to this schedule.

Since 2011, the NDIC has made this annual engagement an important platform for updating the knowledge of the senior members of the Nigerian media. It is an interactive platform between the NDIC’s executive management and the senior stakeholders in the media on the corporation’s mandate and contributions to the nation’s financial system stability, the challenges being confronted and the way forward. Even more than that, it is designed to keep editors informed of topical issues in the financial services industry on an ongoing basis.

From my perspective, this is a sound habit that tends to clear up much of the opaqueness those of us in the media accuse the operators in the financial safety-net circuit. There was so much to talk about in the forum and fortunately the Managing Director, Bello Hassan, along with all his Executive Directors were present. They would remain throughout the programme and take turns to answer every question asked. At the onset, the MD set the ball rolling by telling us how the year had gone by for the corporation. The achievements he rolled out were impressive; introducing the Single Customer View (SCV) framework which has enhanced the speedy payment of insured sums to depositors of closed banks, the speedy prosecution and more informed judgments on failed bank cases, including resolution of long-drawn cases of closed banks, putting in place policy and framework for out-of-court settlement which had enabled the NDIC to resolve some hitherto protracted failed bank litigations such as Fortune Bank and All States Trust Bank.

The NDIC has also been actively raising public awareness of deposit insurance and financial literacy thereby enhancing confidence in the banking system. He went on, and on, piling out achievement, after achievement, and he said it was because of that they were recognised, lauded and lionised by credible bodies and institutions such as the ICPC, ISO, BPSR, and SERVICOM Office of the Presidency among others.

Two of the directors of the corporation took their turn to present papers on issues that were in tandem with the theme of the forum. Abdulhamid M. Aliyu, the Director of the Insurance and Surveillance Department presented; The Path of NDIC Deposit Insurance Coverage: The Past, Present, and Future, a historical and contemporary tour de force of NDIC activities. The Director of Research, Policy and International Relations, Dr Kabir S Katata presented; Reimbursing Depositors Faster in Nigeria Using Single Customer View: Solution and Prospects. Katata explained in sufficient detail the new coinage, the Single Customer View (SCV) that has recently crept into our financial lexicon.

It is a term that is now increasingly gaining traction worldwide. It is used in South Africa, the Netherlands and many other countries. It is a platform deployed to the banks to fast-track depositor reimbursement, particularly in the event of a bank failure. Now that the banks have achieved a high degree of digitization, the deployment of SCV strengthens the NDIC processes and ensures the rendition of quality, timely and complete data to the NDIC by the banks, and also gives complete position of depositors’ data at any given time which helps in enhancing prompt reimbursement in case of bank failure.

The interactive session that followed the presentation of the papers allowed many searching questions from participants. Two of these stand out. What has the innovative SCV achieved so far? It was phenomenal, asserted the Managing Director. He informed the forum that when the Central Bank of Nigeria withdrew the licences of 183 microfinance and primary mortgage banks in May this year, the NDIC was proactive and was able to pay off N1.7 billion to 42,000 customers and still counting.

One question that came up was the issue of the premium that the NDIC collects from banks. It is the premium the banks pay to NDIC according to the size of their deposits which is pooled to pay off depositors in the eventuality of distress. Now that banks don’t fail as they used to, I have also wondered where this premium ends up. The MD confirms that it is indeed a sizable amount, about N2.3 trillion and is securely kept in the CBN. He assured that these are the kind of funds that cannot be tampered with, as they constitute the assurances bank depositors need to continue to do business with banks.

Of course, it is arguable that keeping such a humongous amount idle might not be good enough for an economy like ours that needs an infusion of all available monies, however, we have to trade in the likelihood of massive bank failures and not finding the funds to pay off depositors. I guess both the NDIC and the CBN must be treading the safer paths.