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CBN, NDIC disagree over amendment bill

Nigeria’s two leading finan­cial system regulators, the Cen­tral Bank of Nigeria (CBN) and the National Deposit Insurance Corporation (NDIC) are at logger­heads over moves by the Senate to amend the NDIC Act to give more powers to the corporation.

This came to the fore yesterday during a one-day public hearing held by the Senate Committee on Banking, Insurance and other Fi­nancial Institutions on the “NDIC Act 2006, Cap N102 LFN 2012 (re­peal and re-enactment) Bill, 2015” at the National Assembly.

Making a presentation at the public hearing, the Governor of the CBN, Godwin Emefiele, cau­tioned against the proposed em­powerment of the NDIC through amendment of the Act establish­ing the corporation. The NDIC insisted however, that such pow­ers would only enhance its opera­tional independence.

Emefiele, who was represented by his Deputy, Sulieman Barau, noted that the proposed amend­ment would end up creating insta­bilities in the nation’s financial system operation.

While arguing that some of the powers which the Senate sought to give to the NDIC amounted to usurpation of some of the fun­damental duties of the CBN, he warned that this would result in anarchy in the financial adminis­tration of the country.

He observed that part of the amendment proposals would con­fer executive powers on the NDIC to coordinate and supervise Nige­ria’s financial institutions with­out recourse to the CBN, adding that NDIC, being the undertaker, could not seek to be both judge and prosecutor in its own case.

This, the CBN said, would make NDIC a parallel/coordinate regulator for banks like CBN thus creating overlapping regulatory responsibilities for the NDIC.

The amendments to the NDIC Act, included power to licence banks, power to supervise banks without reference to the CBN, power to determine the licences of banks and powers to assume a liquidator for banks.

“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 minimiser 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 danger and is a recipe for financial insta­bility,” CBN warned.

However, the Managing Direc­tor of NDIC, Umaru Ibrahim, re­sponded by stating that what the amendments wanted to achieve was not outside its constitutional mandate, arguing that the amend­ments would guarantee sound and viable banking system in Ni­geria.

While noting that NDIC was not competing with the CBN, he emphasised the need for the NDIC to have some level of operational freedom from the CBN as intend­ed in the Act establishing it.

“Yes, 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.

“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.

Meanwhile, the Senate Presi­dent, David Mark, represented by the Senate Leader, Victor Ndoma-Egba, declared the public hearing open by saying that the exercise was aimed at obtaining authentic information from various shades of interests and opinions to guide the Senate in its legislative action.

“It is hoped that this exercise, if successfully completed, would produce results that are accept­able to the generality of our citi­zenry,” he said.

Also, the Chairman, Senate Committee on Banks, Insurance, and other Financial Institutions, Bassey Otu, said the amendments being proposed in the Bill were targeted at revitalising and en­hancing the operational frame­work of the nation’s financial in­stitutions.

This, he said, would strength­en their capacities in addressing challenges in line with interna­tional best practices.

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