The Nigeria Deposit Insurance Corporation (NDIC) has cried out that it has less than N2 trillion to meet depositors’ demands in the event of a banking system collapse.
Mr. Bello Hassan, the new Managing Director of the NDIC, made this known in Abuja on Thursday when he was inaugurated as Managing Director of the NDIC.
Hassan appealed that there was need “to build up depositors insurance fund because that’s what we use in making pay out in the event of any liquidation”.
The less than N2 trillion, he said, is inadequate to pay depositors of failed banks in the future, stressing that “there is the need for us to quickly fast track the build-up of the Depositors Insurance Fund (DIF) in the event of any eventuality we shall have sufficient fund to be able to pay depositors without recourse to the treasury”.
If the less than N2 trillion Depositors Insurance Fund is boosted, Hassan said the NDIC will also be able to “offer assistance to insured deposit taking institutions in a timely manner in order to promote stability and confidence within the banking system”.
The new NDIC boss lamented that “there has been slow growth in the Deposit Insurance Fund. However, if the Act is reviewed we will find a way to ensure that we can actually fast track the build up of this Deposit Insurance Fund.
This, he said, has become necessary “when you look back to the global crisis of 2007, 2008 when the CBN had to bail out a number of banks, about N620 billion was injected by the CBN to liquidate those institutions and those liabilities that are being carried by AMCON are due for settlement”.
Hassan warned that the financial system “cannot afford to have similar situation, should we experience another crisis there is need for us to see how we can quickly fast track the growth of this Deposit Insurance Fund so as to ensure that in the event of any crisis we should be able to pay depositors as at when due without recourse to CBN or we go to the treasury to bail us out”.
He said he will work with relevant stakeholders to address challenges confronting the NDIC going forward.