The Nigeria Deposit Insurance Corporation (NDIC) has raised fresh concerns over the impact of mandatory fiscal deductions imposed by the Federal Government, warning that the policy is constraining its ability to build a strong and resilient Deposit Insurance Fund (DIF) needed to protect Nigerian bank depositors in the event of bank failures.
The concern was voiced by the Managing Director and Chief Executive Officer of the NDIC, Mr. Thompson Oludare Sunday, during a courtesy visit to the Managing Director of the Ministry of Finance Incorporated (MOFI), Dr. Armstrong Takang. According to Mr. Sunday, the government’s mandatory 50 per cent cost-to-income remittance policy significantly limits the Corporation’s capacity to accumulate sufficient reserves in the DIF, a cornerstone of effective deposit insurance systems worldwide.
He explained that while NDIC remains fully compliant with all statutory fiscal and financial regulations—including the Fiscal Responsibility Act (FRA) of 2007—the scale of compulsory deductions is undermining its operational flexibility. More importantly, he said, it weakens NDIC’s preparedness to respond swiftly and independently in periods of banking sector distress.
Why NDIC is worried
Mr. Sunday noted that international best practices, as outlined by the International Association of Deposit Insurers (IADI), require deposit insurance institutions to maintain adequate standalone funds. These funds are meant to ensure that depositors can be reimbursed promptly without reliance on emergency government intervention.
According to him, the current structure of mandatory remittances reduces the pool of funds available to strengthen the DIF, thereby exposing the system to potential risks during widespread or systemic bank failures. “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 the Corporation is therefore seeking exemption from certain mandatory fiscal deductions.
In a statement issued by NDIC’s Head of Communications and Public Affairs, Hawwau Gambo, the Corporation clarified that the request for exemption is not a rejection of fiscal discipline but an effort to align Nigeria’s deposit insurance framework with global standards. The statement emphasized that a well-funded DIF is central to depositor confidence and financial system stability.
Commitment to compliance
Despite its concerns, NDIC reiterated its strict adherence to all statutory obligations. Mr. Sunday stressed that the Corporation consistently remits either 20 per cent of gross earnings or 80 per cent of net surplus to the Federal Government, depending on which rule applies. He also highlighted NDIC’s track record of submitting audited financial statements ahead of statutory deadlines and operating fully within the government’s fiscal responsibility framework.
“This culture of compliance is central to our credibility as a key institution within Nigeria’s financial safety-net,” he said, underscoring that NDIC’s request for exemption is aimed at strengthening, not weakening, the country’s financial architecture.
MOFI responds, pledges support
In his response, MOFI’s Chief Executive, Dr. Armstrong Takang, commended NDIC for what he described as an exemplary record of transparency, collaboration, and fiscal responsibility. He acknowledged the strategic importance of a financially strong NDIC, particularly in maintaining depositor confidence and safeguarding the broader banking system.
Takang assured that MOFI—acting on behalf of the Federal Government, which holds a 40 per cent equity stake in NDIC—would continue engaging the Ministry of Finance and other relevant stakeholders to address the Corporation’s concerns. He pledged institutional support to ensure that NDIC can effectively carry out its mandate without compromising its financial sustainability.
A strategic partnership for stability
Both NDIC and MOFI reaffirmed their commitment to sustained cooperation, transparency, and dialogue. Mr. Sunday described MOFI as a critical strategic partner, noting that continuous engagement is essential to balancing fiscal compliance with NDIC’s core responsibility of depositor protection.
He emphasized that resolving the issue of mandatory deductions would not only strengthen NDIC but also enhance the resilience of Nigeria’s financial safety-net as a whole, especially at a time of heightened global and domestic economic uncertainty.
What you should know
Deposit Insurance Premiums are statutory payments made by deposit-taking financial institutions to NDIC. These premiums enable NDIC to guarantee deposits up to the insured limit—currently N5 million per depositor per bank—when an insured institution fails.
Nigerian banks already face significant regulatory costs. In addition to NDIC premiums, they are required to pay levies to the Asset Management Corporation of Nigeria (AMCON). In the first quarter of 2025 alone, ten major banks reportedly paid a combined N377.85 billion in AMCON and NDIC charges. Of this amount, AMCON levies accounted for N283.85 billion, while NDIC deposit insurance premiums stood at N93.99 billion.
Against this backdrop, NDIC argues that easing mandatory fiscal deductions on the Corporation itself would help ensure that the Deposit Insurance Fund remains strong enough to protect depositors and preserve confidence in Nigeria’s banking system.
Emmanuel Bassey is a Financial Expert that has worked in the Banking and Finance Industry for over 15+ years across different banks in Nigeria
