The Central Bank of Nigeria (CBN) has challenged the proposed statutory amendment seeking to empower the Nigerian Deposits Insurance Corporation (NDIC) to liquidate insurance companies in the country.
The CBN rejected the bill yesterday at a one-day public hearing by the House of Representatives Committee on Banking and Currency on a bill that sought to amend the 2006 Act and re-enact the 2014 NDIC Act.
According to the CBN, failing to strip the NDIC of such powers as the bill proposes would place “two captains on one ship.”
The corporation is seeking for sole power to liquidate insurance institutions found to be lacking the necessary requirements to guarantee safety of depositors’ monies.
But Director, Banking Supervision, CBN, Mrs. Tokunbo Martins said the central bank has pending issues about the NDIC amendment.
She said there are two or three areas of the amendment that include mandate, self-appointment as liquidator and termination of insurance firms’ licence which “still need to be harmonised between NDIC and CBN.”
In his submission, the Managing Director, NDIC, Umaru Ibrahim, said the corporation’s proposed amendment seeks to ensure “prompt payment of insured deposits following failure of an insured institution by reducing of time reimbursement from 90 days to 60 days,and powers to deal with parties at fault. That is, directors and officers who cause the failure of an insured institution.”
Others are: “Power to reimburse insured depositors notwithstanding pending court suits, prevention of court execution against the assets of the corporation for a liability of a failed insured institution, prohibition of court orders aimed at preventing the corporation from carrying out its statutory function of deposit protection among others.”
He said there have been challenges that have threatened the safety, stability and soundness of the banking system. These he pointed out to include banking malpractices leading to the near collapse of some banks in 2009.
This, he said made the corporation to require “the necessary legal backing to carry out certain proactive actions to protect depositors and safeguard the financial system.”
The NDIC managing director however said he was surprised to hear CBN’s objection to certain areas of the amendment, after getting written approval and support of the CBN Governor, Mr. Godwin Emefiele.
“I wrote a letter to Emefiele and I later met him. He has agreed on all the areas. Mr. Chairman, if you remember, I even showed you the copy of the letter by the CBN governor,” Ibrahim added.
But Martins insisted that the “CBN governor did not understand what the NDIC is proposing.”
She explained further: “Mr. Chairman, I want to make this clear, what they presented was different and what the governor agreed was something different, in the letter that he signed.”
Meanwhile, the House, prompted by a motion by Odebunmi Olusegun Dokun (PDP, Oyo) titled: “Need for proactive measures by the NCS to check the activities of economic saboteurs in the country,” expressed concern that:”Nigerian borders have become so porous that palm oil and other consumables are easily smuggled into Nigeria through the neighbouring countries.”
The lawmakers were outraged that the NCS has not done much to curb the activities of smugglers and the sale of prohibited goods within the country. – Thisday.
