WorldStage Newsonline– As the bill to amend the Nigeria Deposit Insurance Corporation (NDIC) Act passed second reading at the Senate on Thursday, the Central Bank of Nigeria (CBN) and banks’ executives have come to collision path over the substitution of the “Concurrence” role for the CBN with “Collaborative” role.
While the Central Bank of Nigeria registered its opposition to the amendment during a public hearing on the Bill, banks’ directors and other stakeholders however endorsed it.
At issue on the bill, tagged NDIC No. 63, 2023, is the fear that the “Collaborative” role term being injected into the bill will make the NDIC more independent in taking decisions bordering on its policy objectives, a position strongly loathed by bankers and other stakeholders.
While the aim of the bill is to enhance the Corporation’s effectiveness, independence, and autonomy, stakeholders in the banking and insurance sectors raised opposing views and concerns over it.
Sponsored by Mukhail Abiru, Chairman Senate Committee on Banking, Insurance and other Financial Institutions, the bill among several proposed amendments, has the removal of the “Concurrence” role for the Central bank of Nigeria (CBN) and substituting it with a rather “collaborative” role as the most contentious.
The Bill proposed amendments to sections 2, 3 and 4 of the principal Act substituting the word “collaboration” for the word “concurrence” .
John Onoja, acting director, financial policy and regulation departmet of CBN the meaning of Collaboration means 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 memoranda to the Senate Committee also protested amendment 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 support 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 its 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,” Sokefun stated.
Abiru, Chairman of the Committee said the Senate will look into all the objections.
