NDIC clarifies position on liquidation of insurance firms

By IAfrica
In Nigeria
Jul 12th, 2014
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THE Nigeria Deposit Insurance Corporation (NDIC) has denied media reports that the corporation was seeking powers to liquidate insurance companies and (or) terminate the insurance firms’ licences.

A statement from the NDIC, which was signed by Hadi S. Birchi, Head, Communication and Public Affairs, said the erroneous publications were sequel to the public hearing held on Tuesday, 8th July, 2014 by the House of Representatives Committee on Banking and Currency.

Birchi noted that “as a deposit insurer and liquidator of insured deposit taking financial institutions, the liquidation of insurance companies does not fall under the purview of the corporation.”

The amendments bill which is before the National Assembly, Birchi explained, “does not seek for powers to liquidate insurance companies or terminate the insurance firm’s licenses.”

Emerging challenges after the series of banking crises, as well as the experience garnered in the operation of deposit insurance in Nigeria in the past 25 years, the NDIC said “have necessitated the need for a further review of the 2006 Act in order to empower the Corporation to address the emerging challenges.  The proposed amendments are therefore to enable the corporation discharge its mandates effectively and efficiently.”

Accordingly, some of the amendments and or new provisions being proposed are prompt payment of insured deposits following failure of an insured institution by reducing time of reimbursement (payment to depositors) from 90 days to 60 days; powers to deal with parties at fault i.e. Directors and officers who caused the failure of an insured institution.

Others include the power to reimburse insured depositors notwithstanding pending court suits; prevention of execution of judgment against the assets of the corporation (as body corporate) for a liability of a failed insured institution and limitation of court orders aimed at preventing the corporation from carrying out its statutory functions of deposit protection.

NDIC, the statement added is also asking for amendments to enhancing corporate governance practices in the corporation; increase funding for the corporation to be able to carry out its core mandate of depositor protection; and to enhance its debt recovery efforts.

 


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