However, the NDIC has denied the accusation arguing that there is no conflict between the bill and the CBN Act.CBN Governor, Godwin Emefiele, who made the apex bank’s position at a one-day public hearing on the “NDIC Act 2006, Cap N102 LFN 2012 (repeal and re-enactment) Bill, 2015” organized by the Senate Committee on Banking, Insurance and other Financial Institutions in Abuja, called for the outright rejection of the bill.Represented by his deputy, Sulieman Barau, the CBN boss, said the amendments being sought by the NDIC are capable of causing chaos and anarchy in the financial sector, as according to him, they will confer coordinate functions and powers on the NDIC.Emefiele, insisted that the implications of the proposed amendment to extant law would make the NDIC a parallel or coordinate regulator for banks as CBN; confer conflicting supervisory functions and powers on NDIC over banks; and create overlapping regulatory responsibilities for the NDIC. He added that the powers that the Corporation sought to assume and exercise and their consequences were analyzed to include; Power to licence banks, power to supervise banks without reference to the CBN, power to determine the licences of banks and power to appoint itself as liquidator.Emefiele said: “It is pertinent to mention that all the above powers, which the NDIC seeks to assume and exercise, are ostensibly to ensure that it carries out its function as a risk minimizer and that depositors of distressed banks and other deposit taking financial institutions are paid in good time to avoid delays. “While the CBN supports the desire to pay depositors of distressed institutions in good time, the proposal to make NDIC “the judge and juror” in cases involving banks is fraught with dangers and is a recipe for financial instability.“It is indeed the ingredient for chaos and anarchy and is not practised in any financial system in the world. “There is also the moral hazard of the NDIC as a deposit insurer that charges premium on the basis of the riskiness of an institution which it supervises without recourse to the CBN to rate such institutions as riskier than they actually are in order to enhance the premium charged to bolster the deposit insurance fund. In his response at the hearing, the Managing Director of NDIC, Alhaji Umaru Ibrahim, said even though disagreements exist, the corporation is not seeking any role out of its lawful mandate. Ibrahim said the NDIC is seeking the amendments to ensure safety and soundness in the banking system and not to usurp CBN’s power.He added that the agency was not in competition with the CBN but however cherishes its operational independence and mandate as provided by its Act.“We may have disagreements here and there, we are not reinventing the wheel. I noticed from the presentation of Mr. Barau that apparently he may not be aware of the fact that a lot of these have been resolved and will be resolved,” he said.“We are for collaboration; we are for the safety and soundness of the system. We are not in competition with the CBN. At the same time we cherish our own operational independence and we cherish our mandate as provided by our Act.” he said.“I can assure you that by the time we go through the details you will find that there are very few areas of misunderstanding or conflict that we need to resolve.” he said.“There are very few new things that we have introduced and some of them have been read out.” he said.He said a lot of the issues still remain valid, in our rules and I keep saying that the founding fathers of NDIC, who decided that NDIC should operate as a risk minimizer, in other words, given full powers to be involved in supervision and bank examination and in the liquidation among others, did not do that by mistake. Senate President, David Mark, while declaring the public hearing open said the exercise was aimed at obtaining authentic information from various shades of interest and opinion to enhance and guide the Senate in its legislative action. Mark, represented by Senate Leader, Victor Ndoma-Egba, said: “It is hoped that this exercise if successfully completed would produce results that are acceptable to the generality of our citizenry.”Chairman Senate Committee on Banking Insurance, and other Financial Institutions, Senator Bassey Otu said the repeal and reenactment being sought in the Bill is targeted at revitalizing and enhancing the operational framework of the nation’s financial institutions and in “essence strengthen their capacities in addressing challenges in line with international best practices.”On his part, the Minister of State for Finance, Bashir Yuguda, represented by the Director of Home Finance, Mr. Khali Zaji, noted that even though the NDIC had made giant strides since its establishment, there have been “some operational challenges that have threatened the ability of the Corporation to discharge its mandate effectively which if left unchecked will undermine the safety, stability and soundness of the banking system.”
If you are happy to be contacted by a Daily Trust journalist please leave a telephone
number that we can contact you on. In some cases a selection of your comments will
be published, displaying your name as you provide it and location, unless you state
otherwise. Your contact details will never be published. When sending us pictures,
video or eyewitness accounts at no time should you endanger yourself or others,
take any unnecessary risks or infringe any laws. Please ensure you have read the
terms and conditions.