There discordant tunes on Thursday at the senate as a bill to amend the Nigeria Deposit Insurance Corporation (NDIC) Act No. 63, 2023, pitted participants from the banking and insurance sectors against themselves
The bill aims to enhance the Corporation’s effectiveness, independence, and autonomy.
The Bill which is sponsored by Mukhail Abiru, Chairman Senate Committee on Banking, Insurance and other Financial Institutions have passed second reading at the Senate.
Among several proposed ammendment, one of the most contentious is the removal of the “Concurrence” role for the Central bank of Nigeria (CBN) and substituting it with a rather “collaborative” role in an attempt to make the NDIC more independent in taking decisions bordering on its policy objectives.
While the Central Bank of Nigeria noted its opposition against this ammendment during a public hearing on the Bill at the Senate on Thursday, the bankers directors and other stakeholders however endorsed it.
The Bill proposed ammendments to sections 2, 3 and 4 of the principal Act substituting the word “collaboration” for the word “concurrence” .
Acting director, financial policy and regulation departmet of CBN John Onoja, said the meaning of Collaboration is that NDIC takes the decision and collaborates with CBN.
Conversely, Mustafa Chike-Obi, Chairman of the Bank Directors Association of Nigeria, applauded the removal of the CBN concurrence requirement in Section 32. He noted this change aligns with the NDIC’s mandate to independently regulate insured deposit liabilities.
The Financial Services Regulation Coordinating Committee (FSRCC), in its memorandum to the Senate Committee also protested ammendment to section 16, increasing the capital base of the NDIC from 50 billion to 500 billion which shall be subscribed and held only by the federal government.
“Increasing authorized share capital from 50 billion to 500 billion and fully owned by the federal government render the additional capital redundant as it would not be yielding the required return on investment. The extant share capital structure should be between the Ministry of Finance and CBN as sustained in the principal Act”, it read.
Additionally, Nestok Ikeagu, director of legal at the Securities and Exchange Commission (SEC), objected to the amendment removing the SEC Director-General from the NDIC board. He emphasized that the SEC’s role in investor protection justifies its position on the board, and removing it would hinder interagency collaboration.
Meanwhile the NDIC boss voiced his supoort for the Bill, which he said will strengthen the NDIC.
Also speaking in favour of the Bill, Ronke Sokefun, the former chairman of the NDIC board decried that the NDIC lost it’s independence as liquidator to the CBN.
“Thank you for taking a look at the traditional role of the corporation, which is to act as the liquidator in the event of a bank’s winding up. From the traditional role which the corporation has always executed, all of a sudden, it has to be at the whims and caprice of the CBN, the CBN can decide to have another liquidator.
Abiru, Chairman of the Committee said the Senate will look into all the objections