WorldStage Newsonline (Abuja)– On August 6, 2025, the new Managing Director of Nigeria Deposit Insurance Corporation (NDIC), Mr. Thompson Sunday paid a familiarization visit to the Governor of Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso at the apex bank’s headquarters in Abuja. During the visit, the NDIC’s boss seized the opportunity to intimate his CBN counterpart of the unsavoury challenges the corporation is facing, and which by implication are capable of impacting the intents of economic reforms negatively.
The challenges, according the NDIC leader, include the absence of a unique identifier such as the Bank Verification Number (BVN) for corporate customers and the difficulty in collecting premiums from insured institutions that do not maintain accounts with the CBN.
Other challenges include failure resolution and reimbursement, regulatory and supervisory challenges, debt recovery and asset management, funding and funding Mechanisms, cross-border contagion, rapid technological changes, and political/economic instability.
On Unique Identifier for Corporate Depositors, the NDIC is of the view that there should be need for a unique identifier for corporate depositors, similar to the Bank Verification Number (BVN) for individuals, to facilitate effective tracking and payout during resolution processes.
On the Premium Collection, the NDIC has made it clear that it’s facing challenges in collecting premiums from insured institutions that do not maintain accounts with the CBN, which could be addressed through improved collaboration with the CBN.
On failure resolution and reimbursement, NDIC said it is encountering cumbersome procedures such as challenges in resolving failed banks and reimbursing depositors due to complex and lengthy procedures; creation of moral hazard by banks through the presence of deposit insurance by taking on excessive risks, knowing that depositors are protected; challenges in recovering debts and disposing of assets from failed banks thereby hindering the NDIC’s ability to fully reimburse depositors; and protracted legal processes through frequent adjournments and delays in legal proceedings related to debt recovery from failed banks which further impede the resolution process.
The NDIC is also facing challenges regulatory and supervisory problems which include ineffective supervision due to the large size of the Nigerian banking industry, potentially leading to inadequate oversight and increased risk of bank failures; inadequate (outdated or incomplete) legal framework that hinders NDIC’s ability to effectively carry out its mandate; lack of public awareness arising from limited public understanding of the Deposit Insurance Scheme (DIS) that can undermine depositor confidence and create challenges during bank failures; and challenges in obtaining accurate and timely data from financial institutions that hamper NDIC’s ability to effectively monitor and supervise them.
On debt recovery and asset management challenge, NDIC is challenged that some debtors of failed banks are unwilling to repay their debts, leading to delays and complications in the recovery process. Debtors, sometimes in collaboration with their legal representatives, were said to be exploiting the legal system to delay or avoid debt repayment. Recovering fraudulent loans and other assets from closed banks is a significant challenge, he further stated.
NDIC is also said to be facing funding and funding mechanisms challenge, with ability to fulfill its mandate can be affected by the adequacy of its funding sources and the efficiency of its fund management; and that determining appropriate premium assessments for insured institutions is problematic, despite being crucial for ensuring the financial stability of the Deposit Insurance Scheme.
There are also the challenges of cross-border contagion, manifested in an increasingly interconnected global financial system with the attendant risk of contagion from financial instability in other countries is a concern; the rapid pace of technological advancements in the financial sector which present new challenges and risks that NDIC needs to address; as well as external factors like political instability and economic downturns that can exacerbate the challenges faced by NDIC.
Nigeria’s financial survival has always been threatened by systemic disruption and corruption, making the country to consistently teeter in any move to improve economic well-being.
It’s no gainsaying that the financial system plays a very significant role in economic growth, development and social mobilization, neither is it in doubt that the CBN plays a major role in financial institutions surveillance since it occupies the apex position in the financial system.
As the country is at another cycle of efforts to redirect her financial system for development and growth by the reforms currently being implemented, the joint responsibilities of the CBN and the NDIC at maintaining stability in Nigeria’s financial system cannot be overemphasized.
By design, the two agencies are mandated to collaborate through Joint Crisis Preparedness Framework that enables them to respond effectively to potential financial crises, ensuring depositor confidence and containing systemic shocks; Regulatory Synergy- sharing information and coordinate efforts to supervise banks, with the CBN focusing on monetary policy and financial stability, while the NDIC concentrates on deposit insurance and bank resolution; Risk Mitigation- through collaboration on risk mitigation strategies, including enhancing the Credit Risk Management System (CRMS) and integrating the Global Standing Instruction (GSI) protocol to bolster risk oversight.
Moreover, the shared goals of the two strategic agencies are strictly financial system stability and regulatory effectiveness. This explains why any problem of one will also be the headache of the other.
Industry stakeholders will be interested in knowing whether the CBN is aware and believes in the challenges of the NDIC and what is it doing about them.
The response of the CBN during the August 6 meeting with the NDIC team could only point to the fact that it’s not unaware of the NDIC pains.
According to the CBN Director of Financial Policy and Regulation Department, Mrs. Rita Sike at the meeting, the joint crisis preparedness framework could be dealt with under the auspices of the Financial Services Regulation Coordinating Committee (FSRCC).
She explained that the CBN is in the process of enhancing the Credit Risk Management System (CRMS) to integrate the Global Standing Instruction (GSI), which will allow for the on-boarding of Other Financial Institutions (OFIs).
Cardoso and Sunday also said the meeting that they were keen at deepening collaboration on stronger institutional synergy and to fine-tune the workings of the policies so as to hasten the revamp the economy for the well-being of the nation’s citizens while they acknowledged the shared commitment of both institutions to strengthen collaboration towards safeguarding Nigeria’s financial system, amidst evolving economic challenges.
The CBN boss himself declared that his two years in office revealed critical lessons in the financial industry, requiring that the CBN and the NDIC proactively deal with potential shocks by leveraging modern tools for financial stability. He urged both institutions to work closely in mitigating risks and ensuring depositor confidence.
It’s also interesting to know that the new NDIC boss is not seating on the fence neither stranded with entitlement mentality, but ready to put his expertise at play and turn around the fortune of the corporation.
With his background having cut his teeth with the CBN in 1989 and went ahead to acquire high-end knowledge in Central Banking, spending 24 unbroken years in banking supervision, the new NDIC boss will not be expected to have problems at working with the CBN to turn things around.
He has assured that the NDIC under his watch is committed to aligning its operations with the NDIC Act 2023 (as amended). He assured that the Corporation is in the process of embarking on a strategic restructuring to better align operations with its risk minimization mandate as well as developing a new corporate strategy as the one in use is due to expire at the end of the current year.
In his reaction to the challenges facing the NDIC, Mr. Gbenga Adebamiwa, an oil and gas/ financial stakeholder said: “When I heard the new NDIC boss speak at the CBN, it sounded at first like the usual banker’s jargon, BVN gaps for companies, trouble collecting premiums, and talk of crisis planning.
“But behind those words were quiet warning signs that could undermine the government’s economic reforms. You can’t build a strong future on weak foundations. If company accounts can’t be properly tracked, and if some insured banks operate outside the CBN’s full control, cracks will appear in the system, and cracks don’t stay small. They grow, they hide fraud, they erode trust, and they cause reforms to fail before the benefits even reach the people.
“So when the NDIC calls for a joint crisis plan, it’s not just a talk, it’s an alarm bell. Nigerians are already enduring hardship, skipping meals, and cutting back on essentials because they believe in the promise of a better tomorrow. But if these cracks are ignored, that tomorrow will never come, and all this sacrifice will have been for nothing.”
Mr. Ogochukwu Joshua Ogwu, another financial expert and analyst assessing the challenges vis-à-vis the control and regulatory mandate of CBN and NDIC notes that stability of financial institutions in coordinating and navigating the affairs of a nation’s economy is considered as bedrock of economic development for any nation and therefore that the need to create an efficient financial system anchored on financial stability and effectiveness has become more imperative overtime in order to ensure economic growth.
“There is also the imminent need for financial institutions (Traditional and non-traditional financial institutions) to acclimatize to the trends of financial digitalization across the globe. The Central Bank of Nigeria (CBN) and the NDIC (Nigeria Deposit Insurance Corporation) are two financial bodies laden with the responsibility of overseeing and managing the system of banking in Nigeria,” Ogwu avers.
Expressing his view on the current effort of the CBN to accomplish one of its cardinal missions of effective and efficient management of the financial sector, the Director, Human Resources (CBN), Deacon M. Okunfolami stated that the financial system had undergone radical changes in recent years in Nigeria in line with the international standards.
According to him, the changes have been driven by changes in the banking laws, developments in communication and information technology and the adoption of hi-tech in the business of banking. He noted that these have, in turn, brought about innovations in products and ideas, keen competition, diversity of institutions and new risks.
“The nature of the financial services and especially the way the players in the banking system conduct themselves and practise banking is such that risk is misaligned and depositors tend to panic whenever there is a little sign of distress in the system,” Dcn. Okunfolami also noted.
Moreover, he identified that the urge for high returns and competitive edge has kept operators on their toes thereby making some to cut corners and engage in other sharp practices. All these, he says, pose a huge challenge to the regulatory authorities as they are called upon to restore confidence in the financial system by a more proactive, efficient and effective surveillance.
