The Nigerian Senate has passed a new law that takes away the Central Bank of Nigeria’s (CBN) authority to appoint the CEO of the Nigeria Deposit Insurance Corporation (NDIC). This move, led by Senator Mukhail Adetokunbo Abiru and the Senate Committee on Banking, Insurance, and Other Financial Institutions, is part of an amendment to the Bank Deposit Regulator’s Principal Act.
Previously, the CBN had the power to appoint the NDIC’s board members, including its chairman. With this amendment, the President of Nigeria will now have the sole authority to appoint the NDIC’s chairman and board members. This change aims to make the NDIC more independent, giving it a stronger position to protect depositors’ funds, promote stability among financial institutions, and increase trust in Nigeria’s banking system.
He said: “The NDIC based on the new amendment of its Act, would focus on the examination of the banks and despite the fact that the NDIC 2023”, the Act made substantial improvements to the 2006 Act, its implementation had been fraught with continuous debates.
Senator Abiru noted that stakeholders had repeatedly called for this amendment to address concerns about the NDIC’s autonomy and alignment with global standards. The new law, known as the “Nigeria Deposit Insurance Corporation Act No 33 of 2023,” emphasizes the importance of NDIC’s independence and is seen as a critical step towards improving Nigeria’s financial landscape.
He said, “The Nigerian Deposit Insurance Corporation (Amendment) Bill, 2024, is thus a critical piece of legislation aimed at strengthening the Nigerian financial system.
He said, “Considering the above, therefore, the general consensus among stakeholders was that it is important that the legal framework is reviewed.
“This is to make the Corporation more effective in discharging its functions, safeguard its independence and autonomy and bring it in line with current realities and best practices.
“This is particularly because the Corporation plays a vital role in safeguarding the interests of depositors and promoting confidence in the financial sector.
“The evolving challenges in the global and domestic banking environments necessitate the amendment of the current law to keep pace with these developments and ensure the NDIC remains fit for purpose.”
The bill, which passed its third reading in a session led by Senate President Godswill Obot Akpabio, is expected to strengthen the NDIC’s capacity to ensure financial stability and build public confidence in banks across Nigeria.
