NDIC Seeks Judicial Collaboration In Securing Depositors Fund

The Nigeria Deposit Insurance Corporation (NDIC), has stressed the need for stronger collaboration between the legal and financial regulatory systems to enhance depositor protection and maintain the stability of Nigeria’s banking sector.

Speaking at the opening ceremony of a sensitisation seminar for Federal High Court judges with the theme “Strengthening Adjudication and Depositor Confidence in the Banking System” held in Lagos on Monday, acting managing director/chief executive of the NDIC, Emily Osuji, said legal challenges has continued to impede the timely resolution of failed banks.

Noting that the NDIC had recorded a landmark feat with the timely payment of insured deposits as well as uninsured deposits of the defunct Heritage Bank, she said the corporation still recorded instances where the discharge of its mandate had been restricted by court orders.

Osuji in her welcome address whilst pointing out persistent challenges ranging from protracted litigation and improper garnishee orders, to enforcement actions taken against NDIC assets, even when the law clearly prohibits it, however commended the judiciary for its support.

“The Corporation is still faced with some legal challenges that include, long judicial proceedings, execution of judgment against assets of the Corporation for liability of banks in liquidation. Recent proceedings concerning the liquidation of Heritage Bank have presented opportunities to observe the application of the
NDIC Act 2023, particularly section 69 of the Act which restricts the court from issuing certain orders against the NDIC when it is performing its core mandates, such as reimbursing insured deposits or acting as a liquidator.

“However, the Corporation’s discharge of the aforementioned mandate had, in some instances, been restricted by Court Orders.
Furthermore, legal actions are being entertained against failed insured institutions and the NDIC without leave notwithstanding the provisions of the law prohibiting the same.
Similarly, enforcement actions, such as garnishee orders or attachments, against the NDIC itself or the assets of failed insured institutions are permitted by the Court” she said.

She called for continued engagement with the judiciary as a key stakeholder to uphold the integrity of the deposit insurance system and ensure that failed bank resolutions do not suffer undue legal bottlenecks.

“The Corporation has improved public awareness initiatives and frequently engages the judiciary as critical stakeholders. This is expected to further assist the Corporation in achieving its mandate as a deposit insurer in line with the Core Principles of Deposit Insurers as set out by the International Association of Deposit Insurers (IADI).”

On her part, the Chief Justice of Nigeria, Kudirat Kekere-Ekun, represented by the chairman of the Education Committee of the (NJI) Board of Governors, Hon. Justice John Okoro, stressed the relevance of the seminar in equipping judges with the tools to fairly and efficiently adjudicate financial disputes.

“The financial sector is the lifeblood of any nation’s economy. A stable and resilient financial system is fundamental to economic prosperity, and at the heart of this stability lies an effective deposit insurance mechanism.

“The theme of this Seminar aptly captures the urgent need for judicial officers to be adequately equipped in adjudicating matters relating to deposit insurance. The courts serve as the final arbiters in financial disputes, and as such, our role in ensuring fair, timely, and legally sound resolutions cannot be compromised.”

Kekere-Ekun further highlighted the emergence of fintech and digital finance as added pressure points for adjudication and policy coherence, noting that the rise of decentralised finance “presents new challenges for deposit insurance regulations” and called on judicial officers to be “forward-thinking in addressing emerging complexities.”