THE NIGERIA DEPOSIT INSURANCE CORPORATION

CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1      SUMMARY OF FINDINGS

This study focuses on the Nigeria Deposit Insurance Corporation and the Banking System of Nigeria.

i.      Nigeria Deposit Insurance Corporation (NDIC) ensures safe and sound banking system in Nigerian Economy by insuring the deposit liabilities of licensed banks and other deposit taking financial institutions.

ii.     The project work comprises of five chapters. The first chapter gives a brief introduction to the NDIC and the banking system of Nigeria by ensuring that depositors do not lose all their money when a bank collapses. The second chapter the literature review examines the work written by various people in the area of deposit insurance. It is classified into two namely theoretical literature review and empirical literature review. The third chapter is research methodology which outline the source of data, method of data collection. The fourth chapter data presentation and analysis.

5.2      CONCLUSION

Nigeria experienced bank failures starting from as early as 1930 when the industrial and commercial bank failed. Subsequently, many other bank failed. The reasons for the failures are not far fetched. They included unfavourable competition environment, the absence of a supervisory and regulatory authority, outright fraud e.t.c. These led to the loss of confidence in the banking system and monetary authorities because people lost their hard earned money. The government, in an attempt to restore them people’s confidence in the banking system introduced a deposit insurance scheme, the Nigeria Deposit Insurance Corporation (NDIC) in 1998. The scheme was to give relief to depositors in case of the unexpected failure of a bank. The NDIC worked through four mandates in order to achieve its objective properly i.e. protection of depositors funds. They are deposit guarantee, bank supervision, distress resolution and bank liquidity/claim settlement. Even though these were the broad mandates, the NDIC engaged also in various publicity activities to enhance public confidence in the banking system. There is no doubt that the NDIC has enhanced people’s confidence in the banking system.

5.3      RECOMMENDATIONS

It is an undisputable fact that the NDIC has contributed immensely to restoring public confidence in the Nigerian banking sector it has also paid depositors of insured deposit their claims in the events of bank failures. Not only that, it has also paid uninsured depositors their system. There are (no doubt) commendable achievement as money that could have been lost is paid to their owners. These not withstanding, the NDIC could do more. The job of efficient deposit guarantee is not only the duty of NDIC. Everybody is an active participant. For the NDIC to perform its duties more efficiently and be relevant to all the stakeholders, the following are recommended:

-              Depositors should file their rightful claims as at when due in case of banking failure. This will assist the corporation to process their claims and pay them on time.

-              There is also the perennial issue of unreliable returns being received from the supervised institutions. These returns are obviously rendered to hide whatever difficulties the banks might have. Banks should render the correct return so that the corporation can detect and help them solve their problems before it becomes unresolvable. The correct returns will also help detect early warning signals through an analysis of such returns.

-              Every bank should also undertake (as a matter of necessity) to update their data providing mechanisms. This is because there were breakdown of servers containing database of the closed banks which constrained access to vital information when the need arose after the bank failures.

-              NDIC should also undertake to employ more supervisory staff. This is necessary because of the complexity of the job of supervision and the need to do it more regularly if this is not done, billions of depositors funds could be last in just a day or two due to inadequate supervision.

CHAPTER ONE:          CHAPTER TWO:          CHAPTER THREE:    

CHAPTER FOUR:          CHAPTER FIVE:          REFERENCES:

APPENDIX:          APPENDIX 1:          QUESTIONNAIRE:

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