THE ROLE OF NIGERIA DEPOSIT INSURANCE CORPORATION (NDIC) IN THE EDUCATION AND PROTECTION OF BANK CUSTOMERS A PAPER PRESENTED AT FINANCIAL LITERACY PUBLIC ENLIGHTMENT PROGRAMME ORGANISED BY NDIC IN COLLABORATION WITH THE BANK CUSTOMERS ASSOCIATION OF NIGERIA (BCAN) BY O. O. BABATOLU DEPUTY DIRECTOR BANK EXAMINATION DEPARTMENT (NDIC) NOVENBER

Outline 1.0 Introduction 2.0Activities Focused on Financial Literacy 3.0 Bank Depositor/Customer Protection Activities 4.0Conclusion 2

1.0 Introduction  The NDIC is an agency of the Federal Government of Nigeria established in 1988 through NDIC Decree 18 0f 1988 now NDIC Act 16 of 2006 as amended, with four (4) cardinal mandates: a) Deposit Guarantee b) Bank Supervision c) Failure Resolution d) Bank Liquidation  So far the Corporation had executed the four (4) mandates effectively. 3

1.0 Intro Cont’d.  In pursuit of its Deposit Guarantee mandate, the Corporation had paid the sum of N6.83 billion to 529,046 depositors of 49 closed Deposit Money Banks (DMB) as well as N2.77 billion to 80,178 depositors of closed 128 Micro Finance Banks (MFBs) as at 31 st December,  The insurance cover as at today is N500,000 and N200,000 for DMBs and MFBs/PMBs Depositors, respectively.  The Corporation, in collaboration with the Central Bank of Nigeria CBN), ensured the effective Supervision of the Deposit Money Banks (DMBs), Micro Finance Banks (MFBs) and the Primary Mortgage Banks (PMBs) over the years. That is in line with its mandate on Bank Supervision. 4

1.0 Intro. Cont’d  The Insurance and Surveillance Department (ISD) of the Corporation conducts off-site reviews of returns rendered by banks on an enhanced Integrated Reporting System (IRS)  It extended Financial and Technical Assistance to all eligible Financial Institutions as the need arises.  On its mandate of Failure Resolution, the Corporation had resolved so many distressed insured banks through Purchase and Assumptions, Assisted Mergers and Acquisition, Bridge Banks, Financial Accommodations and Technical Assistance.  Financial Institutions that could not be salvaged and their Operating Licenses were revoked were successfully liquidated by the Corporation and the affected depositors of the closed banks were adequately reimbursed. 5

1.0 Intro. Cont’d  The Assets Management Department (AMD) in the NDIC has been working assiduously to ensure the security of assets seized from judgment debtors, efficient management of closed banks assets and timely reimbursement of uninsured deposits. 6

2.0 Activities Focused on Financial Literacy  The NDIC publishes different books, pamphlets, stickers and posters etc aimed at enlightening members of the public on their rights under the Deposit Insurance Scheme and inform them of the activities of the Corporation. Such publications include: Annual Reports, Quarterly Magazines, Nigerian Law Reports, Stickers, Frequently Asked Questions (FAQ), Facts about NDIC. Etc.  Public enlightenment programmes are conducted at all Trade Fairs in Nigeria as well as National Youth Service Corps (NYSC) orientation camps on the need to save and also be informed of the guarantee by NDIC. 7

2.0 Activities Focused on Financial Literacy Cont’d.  Recently, Deposit Insurance Scheme (DIS) was introduce into the curriculum of some Nigerian Universities in order to inculcate the essence of the DIS and spread the knowledge.  The Corporation constructed classrooms, Computer Centers, Lecture Theatres and Student Hostels in some colleges and Universities in the country in furtherance of its financial literacy drive.  Road shows were being conducted in furtherance of our public enlightenment campaign. 8

2.0 Activities Focused on Financial Literacy Cont’d.  The NDIC; a)Partners with foreign Institutions such as IMF, World Bank, Federal Reserve, OSFI, FDIC, IADI, to build supervisory capacity aimed at protecting depositors. b)To address the misconception by the public, NDIC hosts/fund the annual Conference of the Financial Correspondents Association of Nigeria (FICAN). It is a forum for intimating Journalists with the activities of the NDIC and developments in the financial system with the aim of disseminating same to the general public. 9

2.0 Activities Focused on Financial Literacy Cont’d.  Electronic Bill Boards are being mounted at strategic locations to draw attention of the general public to the need to save especially with the NDIC being available to guarantee such funds in the event of a bank failure.  The on-going BCAN enlightenment on the “Guide To Bank Charges” is one of the initiatives aimed at protecting depositors/borrowers, through knowing their rights as bank customers as well as expanding financial literacy in the country. 10

3.0 Bank Depositor/Customer Protection Activities  In order to ensure that banks are managed in a safe and sound manner, the Corporation conducts Joint on- site Routine, Target and Special examinations with the CBN.  Bank examination process was improved from compliance based to risk based supervisory approach to enhance the effectiveness of supervision.  The Corporation is also involved in investigations of petitions received from bank customers and the general public. In fact, a large sum of money is being refunded to bank customers through NDIC’s intervention. 11

3.0 Bank Depositor/Customer Protection Activities Cont’d.  Follow-up activities are conducted to monitor bank’s compliance with Examiners recommendations aimed at ensuring safety and soundness of the financial system and hence, depositors/customers’ protection.  The Corporation is a member of Financial Institution Training Centre (FITC). The institute provides training for both operators and supervisors in the financial system which in turn protects the depositors/customers.  Some of NDIC staff are being seconded to EFCC, NFIU of the Police and SFU to support their investigative activities. 12

3.0 Bank Depositor/Customer Protection Activities Cont’d.  The Corporation being one of the participants of the Safety Net, is a member of the Financial Services Regulation Coordinating Committee (FRSCC), a body of supervisory agencies in the financial sector established to ensure a safe and sound financial system and by extension customer protection.  As part of capacity building efforts, staff of the Corporation enrolled for Chartered Banker Executive MBA at the Bangor University, United Kingdom and locally, ACCA, ICAN, NIM etc. All targeted at empowering Examiners to execute the mandate of bank supervision and depositor protection. 13

3.0 Bank Depositor/Customer Protection Activities Cont’d.  The NDIC participates in Committee of Chief Compliance Officers of Banks in Nigeria (CCCOBIN), a forum for Chief Compliance Officers of banks in Nigeria to deliberate with the on compliance challenges in the banking industry with the aim of strengthening compliance culture in the industry as well as protect customers interest.  There exists a 24/7 help desk via or toll free help desk on through which customers enquiry/complaints are promptly attended to. 14

3.0 Bank Depositor/Customer Protection Activities Cont’d.  The Corporation: a)Through the sub-committee of the Bankers Committee on ethics and professionalism contributes to adjudication on complaints by banks/customers. b)Engages the Bank Directors Association of Nigeria (BDAN) with the aim of influencing the enthronement of Good Corporate Governance Practices in our banks. c)In promoting the financial inclusion initiative of the CBN, had developed a Framework for a Pass-through Deposit Insurance Scheme to enhance confidence, safety and stability of the Mobile Money Payment system. The deposit insurance scheme caters for all subscribers of f the Mobile Money Operators (MMO). 15

4.0 Conclusion  This NDIC/BCAN enlightenment on understanding the Guide to Bank Charges is quite apt and will go a long way in educating bank Customers of their rights and expectation from the banks.  The programme is all about consumer education, financial inclusion and protection.  I believe the collaboration between the NDIC/BCAN has come to stay in view of its benefit to the two (2) institutions, especially in executing their mandates of bank customer protection. 16

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