Covid 19 Posed as the Ultimate Test of Resilience to Banks – NDIC

The Nigeria Deposit Insurance Corporation (NDIC) Managing Director, Mr. Hassan Bello has stated that Covid 19 posed the ultimate test of resilience to the financial system so far.

Speaking at the 2022 stakeholders’ retreat of the Senate Committee on Banking, Insurance & Other Financial Institutions with the Nigeria Deposit Insurance Corporation, Hassan explained that a resilient financial system is capable of coping with a variety of shocks. COVID-19 has caused a macroeconomic shock and stress that has never been seen before. It has long been seen as the ultimate test of financial system resiliency.

“As evidenced by the financial soundness indicators, Nigerian banks have remained resilient, by being safe, stable and sound in spite of the challenges posed by the COVID-19 pandemic. This success was due largely to the proactive policies and support of the regulatory authorities,” he said.

The NDIC’s contribution to financial stability and resilience, he added, could be assessed by its actions in the areas of deposit guarantee, bank supervision, crisis resolution, and bank liquidation.

He went on to say that the organization advocated sensible risk management procedures in insured institutions since risk management remained critical to a safe and sound financial sector.

The migration to the Differential Premium Assessment System from the flat-rate method of assessing and collecting premiums, he said, was one measure taken to strengthen the deposit insurance system in Nigeria, with the goal of aligning deposit insurance pricing with the risk profile of individual banks and collaboration with the CBN.

It’s also worth noting that the NDIC is actively involved in ensuring that banks follow corporate governance guidelines.

He added that the target ratio was created to maintain operational preparedness in the deposit insurance guarantee, and that deposit insurance cover has been adjusted upward over time in response to changing deposit distributions in banks.

Also, the NDIC’s chairman, Ronke Sokefun, said that deposit insurance is a government-mandated scheme that protects depositors against the loss of insured savings if the bank fails to meet its commitments to depositors.