Nigeria: New amendment to protect bank depositors
Insured depositors would be paid whenever an institution becomes insolvent.The Nigeria Deposit Insurance Corporation (NDIC) has said it is seeking a series of amendment to its enabling Act to minimise the risk of bank failure and be able to pay customers of failed banks promptly.
The decision comes after the Central Bank of Nigeria revoked the operating licence of 14 banks that could not meet the December 31, 2005 recapitalisation deadline.
The NDIC should have immediately paid depositors some of their money trapped in the banks or transferred their deposits to other banks.
But this could not happen with three banks, who instituted court actions to challenge the revocation of their operating licence, resulting in customers of these three banks not having access to their money.
To ensure this does not happen again, the NDIC has proposed the NDIC Act 2014, which would empower it to pay insured depositors of failed insured institutions, whenever an institution becomes insolvent and has suspended payment to depositors, Vanguard reports.
Other proposed changes would empower the NDIC to supervise related entities of insured institutions such as commercial banks, mortgage banks and microfinance banks.