Nigeria Deposit Insurance Corporation (NDIC) is an agency established by the Nigerian government to insure that depositors and investors do not loose their money and investments to a financial institution.
Nigerian Deposit Insurance Corporation guarantees the settlement of insured funds should a financial institution be unable to repay their depositors and investors.
In other words, should a Nigerian banking institution fail – the Nigerian Deposit Insurance Corporation (NDIC) steps in to make sure that account holders do not lose their deposits.
Nigeria Deposit Insurance Corporation Act 2006
Nigeria Deposit Insurance Corporation- Act 2006 is an Act that canceled the Nigeria Deposit Insurance Corporation Act, of 1988 and to enact the Nigeria Deposit Insurance Corporation Act, 2006; and for related matters.
The National Assembly of the Federal Republic of Nigeria, being the law makers has observed that there are some lapses contained in the Nigeria Deposit Insurance Corporation Act, of 1988, so they came up with an amendment.
The amendment of the NDIC Act of 1988 is what gave birth to the Nigeria Deposit Insurance Corporation Act 2006 which is now the major Acts that guide the operations of the Corporation.
To view the Nigeria Deposit Insurance Corporation Act 2006, you can go to their web page https://ndic.gov.ng/resources/legal-matters-regulations/
Functions of the Nigeria Deposit Insurance Corporation
Nigeria Deposit Insurance Corporation insure all deposit liabilities of every licensed banks and other financial institutions operating in Nigeria.
For example, if you deposit N20k into your bank account, your are indirectly “lending” your money to the bank. Bank can decide to use your N20k for business or other short term investments.
In the event that bank could not pay your N20k deposit due to bad investment, you have got nothing to loose because NDIC have got you covered.
So while that money appears in your account and you have access to it any time, it is “working” meaning it is being used to conduct other transactions that should not fail.
Here are functions of the Nigeria Deposit Insurance Corporation
- Nigeria Deposit Insurance Corporation provides assistance in the interest of depositors in case of financial difficulties.
- They also guarantee payments to depositors in case of suspension of payments by insured banks and other financial institutions.
- Nigeria Deposit Insurance Corporation also assist the federal government in the formulation and implementation of banking policies.
- They helps in speedy recovery of debts owned to failed banks and other financial institutions.
- They also helps in speedy trial of offences relating to financial malpractices in banks and other financial institutions as specified in their Act.
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The Role of Nigeria Deposit Insurance Corporation in the Banking Industry
Nigerian Deposit Insurance Corporation-One major reason the Nigeria Deposit Insurance corporation implemented the Failed Banks Act of 2006 was to ensure that Justice is being served between financial institutions and their depositors in the event of any financial dispute.
They also play a major roles in the Banking Industry by assisting the banks to resolve disputes through speedy recovery of their non-performing loans.
Another major role they play in the banking industry is to sanitize the banking sector through criminal prosecution and conviction of lawless bank directors found guilty of banking malpractices.
So generally, Nigeria Deposit Insurance Corporation ensure safe and sound practices by punishing the bank directors, staff and customers who contributed in any manner to the collapse of any bank as well as recovery of debts owed failing or failed banks.
Why is the Nigeria Deposit Insurance Corporation (NDIC) important?
Nigeria Deposit Insurance Corporation play a big role in our local financial institutions today. This is because without them you may wake up one day and discover that all your money in the bank are gone and your financial institution may have little or nothing to do about it.
The Nigeria Deposit Insurance Corporation is one of the vital agencies in Nigeria financial sector.
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