The Nigeria Deposit Insurance Corporation (NDIC) has expressed concerns that the Federal Government’s 50 per cent cost-to-income ratio policy is hindering its ability to build a robust financial buffer to protect depositors. According to the Managing Director/Chief Executive of the NDIC, Mr Thompson Sunday, the corporation complies with the policy but notes that the deductions affect its capacity to maintain a strong Deposit Insurance Fund.
During a courtesy visit to the Managing Director/Chief Executive of the Ministry of Finance Incorporated (MOFI), Dr Armstrong Takang, in Abuja, Sunday emphasized the NDIC’s commitment to fiscal and financial regulations, including the Fiscal Responsibility Act 2007. He stated that the corporation submits its financial statements ahead of statutory deadlines and complies with statutory remittance obligations, including the payment of 20 per cent of gross earnings or 80 per cent of net surplus to the Federal Government.
However, Sunday cautioned that the 50 per cent cost-to-income ratio policy poses operational constraints, as it limits the NDIC’s ability to respond promptly and effectively to bank failures without relying on government support. He explained that maintaining a robust Deposit Insurance Fund is critical to the NDIC’s role as a key financial safety-net agency responsible for protecting depositors and supporting confidence in the banking system.
The NDIC is seeking an exemption from the policy, citing international standards under the Core Principles for Effective Deposit Insurance, which require deposit insurers to maintain adequate funds. Sunday described MOFI as a critical stakeholder, given the Federal Government’s 40 per cent equity stake in the NDIC, and emphasized the need for continued collaboration to ensure the NDIC meets its obligations to the government while safeguarding depositors’ funds.
In response, Takang commended the NDIC’s spirit of collaboration and compliance with fiscal regulations, assuring that MOFI would continue to engage the Federal Ministry of Finance on the NDIC’s behalf. Both institutions reaffirmed their commitment to cooperation, transparency, and accountability. The Federal Government’s 50 per cent cost-to-income ratio policy, introduced in December 2023, aims to improve revenue mobilization and fiscal discipline across Ministries, Departments, and Agencies. The NDIC’s concerns highlight the need for a balanced approach to fiscal policy, one that ensures the stability of the financial system while supporting the effective operation of key agencies like the NDIC.