The Nigeria Deposit Insurance Corporation (NDIC) has urged the Federal Government to reconsider its 50 per cent cost-to-income ratio policy, saying the rule constrains the corporation’s ability to build a robust Deposit Insurance Fund that can protect depositors and shore up confidence in the banking sector.
Deposit Insurance Fund concerns drive NDIC appeal
Speaking during a courtesy visit to the Managing Director of the Ministry of Finance Incorporated in Abuja, NDIC Managing Director and Chief Executive Mr Thompson Sunday said the corporation complies fully with fiscal and financial obligations but needs greater flexibility to strengthen its financial buffer. “We comply with statutory remittance obligations, including payment of 20 per cent of gross earnings or 80 per cent of net surplus to the Federal Government, as applicable,” he said, adding that the NDIC submits financial statements ahead of deadlines.
Mr Sunday emphasised that the NDIC adheres to the Fiscal Responsibility Act 2007 and other regulations, but warned that the 50 per cent cost-to-income cap imposes operational constraints. “While we comply with the policy, the deductions affect our ability to build a strong Deposit Insurance Fund,” he said. The fund, he added, is essential to allow the NDIC to respond promptly and independently to bank failures without resorting to government support.
International standards and local implications
The NDIC cited the Core Principles for Effective Deposit Insurance, issued by the International Association of Deposit Insurers, which call for deposit insurers to maintain adequate funds. The corporation argues that a sufficiently funded insurance mechanism is important not only for quick interventions in the event of bank distress but also to preserve public confidence and financial stability.
Analysts say the NDIC’s request highlights a wider tension between fiscal prudence at the national level and the operational needs of safety-net agencies. The 50 per cent cost-to-income rule is intended to control administrative spending across public institutions, yet the NDIC maintains that the policy, as applied, reduces the pace at which its Deposit Insurance Fund can grow to internationally recommended levels.
What next for policy and financial safety nets
Mr Sunday’s appeal to the Ministry of Finance Incorporated is likely to spark discussions about targeted exemptions or adjustments that preserve fiscal discipline while allowing the NDIC to meet its mandate. Options under consideration could include calibrated relief on the cost-to-income ceiling for deposit insurers, temporary waivers tied to fund-building milestones, or alternative mechanisms for retaining surplus within the NDIC for contingency purposes.
For now, the corporation signals it will continue to comply with existing statutory remittances and transparency requirements. The NDIC’s stance represents a call for a policy balance that protects depositors, supports confidence in the banking system, and aligns domestic practice with international expectations for deposit insurance.
As Nigeria’s financial authorities examine the request, the outcome will have implications for how safety-net institutions are funded and for the broader resilience of the banking sector in the face of potential failures.
Key Takeaways:
- NDIC says the Federal Government’s 50% cost-to-income rule limits its ability to grow the Deposit Insurance Fund.
- The corporation affirms compliance with statutory remittances and the Fiscal Responsibility Act 2007.
- NDIC cites international Core Principles urging adequate funds to respond to bank failures.
