Senate Passes Bill to Strengthen NDIC’s Role in Safeguarding Bank Depositors

By Iyojo Ameh

The Senate has given its final approval to the “Nigeria Deposit Insurance Corporation Act No 33 of 2023,” a bill aimed at enhancing the Nigeria Deposit Insurance Corporation’s (NDIC) capacity to protect depositors, maintain financial stability, and build public trust in the banking system.

Sponsored by Senator Mukhail Adetokunbo Abiru (Lagos East) and the Senate Committee on Banking, Insurance, and Other Financial Institutions, the bill represents a significant update to existing financial regulations.

Presenting the committee’s report, Senator Abiru emphasized that the legislation reinforces NDIC’s independence, shifts certain powers from the Central Bank of Nigeria (CBN) to the President, and updates NDIC’s role in examining banks.

The bill allows the President to directly appoint the NDIC’s board members, a move that contrasts with previous requirements that made the CBN responsible for recommending candidates for key roles.

“The Nigerian Deposit Insurance Corporation (Amendment) Bill, 2024, is crucial for the health of the nation’s financial system. The amendments strengthen the NDIC’s ability to secure depositor funds, promote stability among financial institutions, and enhance public confidence in the banking sector,” Abiru stated during the plenary session on Tuesday.

Addressing long-standing stakeholder concerns, the bill seeks to end debates surrounding the 2023 NDIC Act by addressing gaps in the existing law. It also revises the role of the Permanent Secretary, Ministry of Finance, who previously served as board chairman. Given the demanding nature of that role, the bill now includes a provision for the Minister of Finance to appoint an interim management committee within 30 days if the board’s term expires without a replacement.

The NDIC, founded to protect depositors and uphold financial stability, plays a vital role in reimbursing insured funds when financial institutions face insolvency. With over 30 written memoranda and several oral presentations at a public hearing, stakeholders expressed overwhelming support for the bill. Abiru highlighted that the NDIC’s regulatory powers must keep pace with the dynamic global financial environment, making these amendments both timely and essential.

Senator Abiru noted, “The changes will empower the NDIC to meet contemporary challenges in the financial sector, allowing it to uphold best practices and protect the interests of depositors more effectively.”

This legislation is expected to provide the NDIC with the necessary autonomy to adapt to an evolving financial landscape and reinforce stability across Nigeria’s banking sector.