History

The history of Nigeria Deposit Insurance Corporation (NDIC) has its origin in the report of a committee set up in 1983 by the Board of Central Bank of Nigeria (CBN), to examine the operations of the banking system in Nigeria. The Committee in its Report recommended the establishment of a Depositors Protection Fund. Consequently, the Nigeria Deposit Insurance Corporation was established through the promulgation of Decree No. 22 of 15 th June 1988. This was part of the economic reform measures taken by the then government, to strengthen the safety net for the banking sector following its liberalization policy and the introduction of the 1986 Structural Adjustment Programme (SAP) in Nigeria.

The phenomenal increase in the number of banks from 40 in 1986 to 120 in 1992 led to:

• Increased Competition amongst banks leading to sharp practices
• People of questionable integrity becoming bank owners and managers
• Inadequate Manpower
• The coming together of strange bedfellows due to the licensing requirement that banks maintain adequate geographical spread.

All these led to serious breakdown in Corporate Governance and Boardroom squabbles. The unpredictable policy environment, downturn in the economy and political upheavals at the time, also exacerbated the difficult situation the Corporation found itself in. The banking industry was therefore, already in distress by the time the Corporation commenced operations in March 1989. NDIC operated under a difficult terrain at the time and was immediately saddled with the management of distress in the banking industry, to avert the impending systemic crises and its resultant consequences. Some of the measures undertaken by the Corporation at the time, to manage distress in the interest of the depositors and the System included:

• Moral suasion; continuous interaction with bank managers/owners
• Imposition of Holding Actions on distressed banks to restrict operations and encourage self-restructuring - about 52 distressed banks had Holding Actions imposed on them at that time.
• Rendering of Financial Assistance to banks; In 1989 alone, NDIC in collaboration with the CBN granted facilities to the tune of N2.3 billion to ten banks with serious liquidity problems
• Take over of Management and Control of 24 distressed banks between 1991 and 1996.
• Acquisition and restructuring of seven (7) distressed banks which were handed over to new investors in 1999 and 2000
• Implementation of Failed Banks Decree No. 18 of 1994. At the end of 1995, about one out of every two banks in Nigeria was distressed. The Decree was intended to assist distressed banks recover their classified assets and punish the malpractices that contributed to the distress. As at June 1996, the Corporation had recovered about N3.3 billion.

BOARD /MANAGEMENT AT INCEPTION

At inception, the Corporation had a Board of Directors made up of the following:

Late Alhaji Abdulkadir Ahmed - Chairman

Mr. John U. Ebhodaghe - Managing Director/Chief Executive

Alhaji Ahmadu Abubakar - Director-General, Federal Ministry of Finance & Economic Development (Member)

Alhaji Abdulahi Mahmoud - Executive Director (Operations)

Dr. Wole Adewunmi - Executive Director, Finance & Administration

By January 1998, a total of 31 banks had been closed and the Corporation successfully paid depositors their insured deposits. The Corporation also recovered over N3 billion from state governments and their agencies, being long outstanding debts owed to the banking industry, hitherto left unpaid. The level of distress was subsequently reduced, while bank owners and managers were challenged to be more responsible in the discharge of their duties.