Financial Institutions Supervision

Banking supervision is an essential element of a deposit insurance scheme as it seeks to reduce the potential risk of failure and ensures that unsafe and unsound banking practices do not go unchecked. The Corporation supervises banks so as to protect depositors; ensure monetary stability; ensure effective and efficient payment system, and promote competition and innovation in the banking system.

Supervision of insured banks is an integral part of the mechanism for ensuring safe and sound banking practices and the Corporation has continued to accord this top priority. This entails on-site examination and off-site surveillance, both of which are mutually reinforcing. The off-site supervision provides early warning signals which is useful in prioritising on-site examinations and assessing potential problem areas.

The establishment of the NDIC in 1989 and its involvement in on-site examination have significantly shortened the examination cycle such that despite the increase in the number of banks and their branches, banks are now examined annually as against once in three years prior to the establishment of the Corporation.