Nigeria Deposit Insurance Corporation, NDIC is seeking extra statutory powers to enable the commission supervise the non banking investments, subsidiaries and affiliates of banks in the country.
This, according to the commission, is preventing the possibility of the banks using such other subsidiaries as vehicle for circumventing the banking laws, rules and regulations or avenues through which depositors’ funds are dissipated.
The proposal is among other changes contained in the NDIC Act 2006 (Repeal and re-enactment) Bill 2015, which scaled second reading yesterday in the Senate.
“Nigerian banks have become widely diversified, having established a number of banking and non banking subsidiaries, affiliates and associates. It is imperative that the NDIC should have enough access to the books and affairs of all such related entities of insured banks to enable it assess transactions between them and to empower NDIC to request for information from such related entities,” Section 32(5) of the proposed bill states.
Chairman of the Senate Committee on Banking, Insurance and other Financial Institutions, Senator Bassey Otu, in his lead presentation of the bill, explained that the bill is aimed at strengthening NDIC’s supervisory capacity and addressing other challenges in the area of liquidity of failed financial institutions as well as ensuring compliance with the principles of an effective deposit insurance administration.
The bill also seeks to enhance the General Reserve Funds of NDIC, which had been negatively affected by some of the requirements of the Fiscal Responsibility Act 2007.
In addition, the proposed bill seeks for the establishment of the Insured Institution’s Resolution Fund, IIRF, as an open bank resolution measure for resolving distress in large insured deposit-taking financial institutions.
The bill moreover, seeks to empower the NDIC to pay insured deposits to depositors of an insured institution whose operating licenses have been revoked even when litigation challenging revocation of the failed institutions operating license or its winding up order is pending in Court.
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