The Managing Director/Chief Executive,Nigeria Deposit Insurance Corporation (NDIC), Mr. Bello Hassan has appealed to Appeal Court Justices to consider having Practice Direction for Court of Appeal on failed banks matters that will ensure quick and effective dispensation of appeal matters relating to recovery of debts owed failed banks and prosecution of parties that might have contributed to the failure of their banks.
Hassan also stated that NDIC will continuously solicit for more synergy and collaboration with the Judiciary.
He made the appeal at the sensitisation seminar for honourable Justices of Court of Appeal held in Lagos,with the theme of this year’s Seminar is, ‘’Building Strong Depositor Confidence in Banks and Other Financial Institutions through adjudication of disputes’’.
The theme, the NDIC boss said was deliberately chosen, to re-echo the huge responsibility placed on the corporation as Deposit Insurer, and the need to collaborate with critical stakeholders such as the judiciary, in ensuring safe and sound financial system in Nigeria.
The mandates of the Corporation, he said are: Deposit Guarantee, Bank Supervision,Failure Resolution and Liquidation.
He also reeled out NDIC public policy objectives to include : to enhance confidence in the financial system and contribute to financial system stability through the protection of depositors.
The Managing Directed pointed out that in discharging these mandates, especially resolution of banking distress and liquidation of failed banks, some complex legal issues bordering on administration of deposit insurance may be brought before the lordships for determination of the rights of the parties, adding that it is NDIC belief that a proper understanding of the concept and practice of deposit insurance would enable the justices to appreciate the legal issues involved in determining the cases expeditiously.
According to him, “We therefore, sincerely believe that your pronouncements on these issues, will invariably set judicial precedents, thereby contributing to the development of bank insolvency law and practice in Nigeria, which is an evolving area of legal jurisprudence.”
He told the justices that one fact that everybody knows is that although banking is a commercial venture, it however, also a business venture with a difference.
Banks, he argued primarily operate with depositors’ funds rather than the funds of the business owners, adding that considering the inherent risk associated with banking and the need to ensure the safety of depositors funds, banks are generally regulated and supervised.
He stated that in addition to the surveillance, depositors are further provided with protection by way of deposit guarantee scheme and that this scheme provides seamless and continuous access by depositors of their funds upon license revocation.
Deposit Insurance, he explained therefore, becomes a critical component of safety-net arrangement put in place to ensure the protection of depositors.
“We are conscious of the fact that no matter how robust the existing legal framework is, the need for collaboration can never be over-emphasised, bearing in mind the role of the judiciary who has been vested with powers under the Constitution of the Federal Republic of Nigeria to interpret laws and adjudicate on matters.
“In the same vein, we recognize the fact that the effectiveness of the Deposit Insurance System (DIS) requires a deep understanding of the unique roles of the Corporation in the country’s financial eco-system. This sensitisation seminar is therefore, one of the initiatives of the Corporation to engage the Judiciary as an important arm of Government towards achieving its mandate,” he said.
He listed some of the benefits derived from organising the programme over the years to include:
i. The challenge of liquidation-related litigations experienced in the past, which makes it difficult for the Corporation to wind-up banks whose licenses had been revoked by the Central Bank of Nigeria and to settle depositors and other claimants promptly, has drastically reduced.
ii. Better understanding of the roles of the Corporation as a corporate body/Deposit Insurer as distinct from NDIC acting as Liquidator of failed banks whose licenses had been revoked. Consequently, the incidence of litigants obtaining judgement against banks in liquidation and trying to levy execution against the assets of the Corporation as a corporate body has been substantially minimized.
iii. The Seminar has provided opportunity for my Lords, and the paper presenters as well as paper discussants who are mostly senior members of the bar to brainstorm on the salient provisions of the Failed Banks (Recovery of Debts and Financial Malpractices in Banks) Act 1994 as a major tool for recovery of debts owed failed banks.
Hassan added that the desire of the NDIC to continuously promote depositor confidence within the Nigerian Banking system was further demonstrated by the upwards review of the maximum deposit insurance coverage levels, as approved by the Corporation’s Interim Management Committee (IMC), in April 2024.
He thanked the President, and all the Justices of the Court of Appeal for finding time out of their busy schedule to attend this seminar, stressing that it is an eloquent testimony of the desire of the Judiciary to ensure a safe and sound banking for the nation.
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