The Nigeria Deposit Insurance Corporation (NDIC) has warned that the Federal Government’s mandatory fiscal deductions are constraining the Corporation’s ability to build a robust Deposit Insurance Fund (DIF).
According to the Managing Director/Chief Executive of the corporation, Mr. Thompson Oludare Sunday, the mandatory 50% cost-to-income policy is constraining the Corporation’s ability to build a robust Deposit Insurance Fund required to safeguard bank depositors during failures.
This much was revealed during a courtesy visit to the Managing Director/Chief Executive of the Ministry of Finance Incorporated (MOFI), Dr. Armstrong Takang.
Mr. Sunday said NDIC remains fully compliant with all statutory financial and fiscal regulations, including the Fiscal Responsibility Act (FRA) 2007.
Sunday stressed that international benchmarks under the International Association of Deposit Insurers (IADI) require deposit insurers to maintain adequate funds to reimburse depositors without relying on government.
“These deductions affect NDIC’s ability to build a strong Deposit Insurance Fund, which is needed to respond effectively when banks fail,” he said, adding that NDIC is seeking exemption to enhance its readiness for potential bank distress.
What NDIC is saying
The Corporation is seeking exemption from Federal Government’s mandatory fiscal deductions, particularly the 50% cost-to-income policy. In a statement on Tuesday signed by Hawwau Gambo, Head, Communications & Public Affairs, Mr. Sunday was quoted as saying that the mandatory remittances are limiting its operational flexibility and weakening its ability to build a robust Deposit Insurance Fund (DIF).
According to the statement, these compulsory deductions reduce the funds available for strengthening the DIF, which is critical to NDIC’s capacity to effectively protect depositors and respond swiftly in the event of bank failures.
The NDIC Managing Director emphasized that international best practices under the International Association of Deposit Insurers (IADI) require deposit insurers to maintain sufficient financial resources to reimburse depositors without depending on government intervention.
He noted that the current deductions undermine this objective, prompting NDIC to seek exemption from such remittances to enhance its preparedness and resilience against potential banking sector distress.
However, Sunday reaffirmed NDIC’s strict adherence to statutory remittance obligations, including the payment of 20% of gross earnings or 80% of net surplus to the Federal Government, depending on the applicable rule.
He also noted that NDIC consistently submits its financial statements ahead of statutory timelines and operates within the Federal Government’s fiscal discipline framework.
“This culture of compliance is central to our credibility as a key institution within Nigeria’s financial safety-net,” he stated.
MOFI acknowledges NDIC’s compliance, pledges institutional support
Responding, MOFI’s Chief Executive, Dr. Armstrong Takang, commended NDIC for what he described as an exemplary record of collaboration, transparency, and fiscal responsibility.
He assured that MOFI—representing the Federal Government’s 40% equity stake in NDIC—would continue to engage the Ministry of Finance on the Corporation’s concerns.
Takang emphasized that a stronger NDIC is vital to safeguarding depositor confidence and broader financial system stability, pledging institutional support to ensure the Corporation can effectively fulfil its mandate.
Strategic partnership for financial stability
Both agencies reaffirmed their commitment to sustained cooperation and transparency, with Mr. Sunday emphasizing that NDIC remains focused on balancing regulatory compliance with its overriding mandate of depositor protection and financial system stability.
He described MOFI as a strategic partner whose sustained engagement is critical to ensuring NDIC continues to meet fiscal obligations without compromising its core function of maintaining confidence in Nigeria’s banking system.
What you should know
Deposit Insurance Premium is a statutory payment by deposit-taking banks that ensures that NDIC, as an insurer, guarantees the payment of deposits up to the maximum limit (Now N5 million) in accordance with its statute in the event of failure of an insured financial institution.
Nigerian banks spend huge sums of money to meet this obligation of mandatory regulatory levies, including statutory Assets Management Corporation of Nigeria (AMCON) levies.
In Q1 2025 alone, 10 major banks were reported to have paid approximately N377.85 billion in combined AMCON and NDIC charges, with AMCON levies accounting for N283.85 billion and NDIC deposit insurance premiums making up N93.99 billion of that amount.
