NIGERIA DEPOSIT INSURANCE CORPORATION
WELCOME ADDRESS BY THE Ag. MANAGING DIRECTOR/CHIEF EXECUTIVE OFFICER OF NIGERIA DEPOSIT INSURANCE CORPORATION ALHAJI UMARU IBRAHIM mni, AT THE NDIC RETREAT ON THE PROPOSED AMENDMENT OF THE NDIC ACT 2006 FOR THE MEMBERS OF HOUSE OF REPRESENTATIVES COMMITTEE ON BANKING AND CURRENCY HELD AT AMBER TINAPA HOTEL CALABAR, ON MONDAY 19TH JULY 2010.

The Chairman House Committee on Banking and Currency,
The Deputy Chairman – Hon. Hussein Namadi,
Honourable Members,
My colleagues from NDIC,
Ladies and Gentlemen.

It is a great honour for me to welcome all of you to this retreat at the famous Tinapa Business Resort.  We sincerely appreciate the fact that you Honourable Members can spare some time to come here to examine a matter that is of great importance to the NDIC i.e. the review of its enabling law.
As you are all aware the Nigeria Deposit Insurance Corporation was set up by NDIC decree No 22 of 1988, with the primary mandate of insuring deposit liability of license deposit taking financial institutions.  Deposit insurance is part of the safety net arrangement needed to maintain financial stability and public confidence in the financial system.

The NDIC was designed as a risk minimizer as against merely a pay box.  As a risk minimizer, the Corporation is expected to play a proactive role in promoting safety and soundness of the financial system through bank supervision and engaging in effective distress resolution.  Indeed, the Deposit Insurance Scheme in Nigeria has been given added responsibility to handle the orderly winding-up of closed financial institutions which entails realization of closed bank assets and using the proceeds to settle depositors’ liabilities and other creditors.  However, over the years, it became evident that the 1988 Act was inadequate for effective deposit insurance.  Fortunately, through the effort of the House Committee on Banking and Currency and your counterparts in the Senate, the National assembly amended the NDIC Act in 2006.  Although the amendment in 2006 had addressed some of the identified weaknesses in the 1988 Act, the amendment did not foresee the developments that emerged during the 2008 global economic meltdown and the corporate governance issues that came to the fore.

You would recall that even developed economies suddenly realized that their regulations were not robust enough.  Most countries had embarked on the review of their legislation and regulation.  It is in the above context that a further review of the NDIC Act 2006 became more pertinent.  The Corporation had come up with proposals and this retreat is intended to give you Honourable Members the opportunity to critically examine the proposals while at the same time giving the corporation the opportunity to provide you with insights, clarification or explanations to the reasons that informed the proposals.  Some of the key issues covered in the proposed amendments include;

• Enhancement of Deposit Insurance Coverage
• Corporate Governance Issues
- Tenure
- Conflict of interest
• Prompt payment of depositors’ funds
• Enforcement powers
• Enhancement of the DIF
• Protection of the assets of the closed banks/NDIC against attachment

The proposed amendment have therefore attempted to address the various challenges faced by the Corporation, in particular those that prevent immediate payment of insured deposit to depositors of failed banks as a result of legal/court actions usually instituted by erstwhile owners of those banks.
We hope most fervently that this retreat will afford Honourable Members the opportunity to appreciate the challenges faced by the Corporation and that they will bring their enormous wealth of experience to bear in considering the amendment that will enable the Corporation meet those challenges.  It is not surprising that the NDIC on behalf of the depositors of the Banking Industry is elated by the attendance of the Honourable Members at this retreat.  Your presence at this retreat is ample demonstration of your commitment to ensuring a safe and sound banking system and promoting financial stability through an efficient deposit insurance system in Nigeria being one of the three components of Financial safety Net.  The NDIC heartily welcomes you all to this retreat and wishes you fruitful deliberations.

Thank you for your attention.