Bank resolution set to protect public funds, depositors- NDIC

Nigeria Deposit Insurance Corporation has said that banking resolution was set to protect depositors and minimise adverse effects on banking and financial stability.

Deputy Director Research, Policy and international Relations, Dr Kabir S. Katata who disclosed this at workshop said resolution would help to ensure continuity of basic banking functions, minimises reliance on.public sector support, allocate loses to firm owners and protect client funds and assets.

Describing effective resolution as a series of systemic action designed to end a bank’s distressed condition with minimal disruption and without exposing taxpayers to loses, he said it promote efficient transparent and orderly winding down and exit.

He said that as at December 2018, NDIC has paid cumulative sum.of N8.25 billion as insured amount to 442,999, depositors of banks, a total of  N2.97 billion was paid to 83415 depositors of closed Micro Finance Banks while the sum of N70.53 million paid to 869 depositors of Primary Mortgage Bank.

To improve the effectiveness of payment to insured depositors and boost confidence, he the Corporation is considering the use of e-payment and advance payment system.

He said poor public awareness, cumbersome judicial process resulting in long drown out litigation on winding up actions and debt recovery matters are major challenges of bank failure resoluction.

He said that, court action by erstwhile shareholders, problems of assets realisation loans and physical assets due to large size of insiders loans, poor loan documentation, poor quality, lack of secondary market for risk assets also hinders bank failure resolution in the country.