The Nigeria Deposit Insurance Corporation (NDIC) has warned that the federal government’s 50 per cent cost-to-income ratio policy was limiting its ability to build a strong financial buffer to protect depositors.
The chief executive of the agency, Mr Thompson Sunday, in a statement by the Head of the Communication and Public Affairs Department, Mrs Hawwau Gambo, on Tuesday, said the NDIC complies with the policy but lamented that “the deductions affect NDIC’s ability to build a strong Deposit Insurance Fund, which is needed to respond effectively to bank failures.”
Mr Sunday restated the corporation’s adherence to fiscal and financial regulations, including the Fiscal Responsibility Act 2007, during a courtesy visit to the Managing Director/Chief Executive of the Ministry of Finance Incorporated (MOFI), Mr Armstrong Takang, in Abuja.
According to the statement, Mr Sunday stressed that the NDIC “complies fully 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, as applicable,” adding that the corporation also submits its financial statements ahead of statutory deadlines.
The NDIC boss said this commitment to transparency aligns with its role as a key financial safety-net agency responsible for protecting depositors and supporting confidence in the banking system.
However, he cautioned that while the corporation also complies with the Federal Government’s 50 per cent cost-to-income ratio policy, “the policy poses operational constraints.”
He explained that maintaining a robust Deposit Insurance Fund is critical to the NDIC’s ability to respond promptly and effectively to bank failures without depending on government support.
He added that international standards under the Core Principles for Effective Deposit Insurance, issued by the International Association of Deposit Insurers, require deposit insurers to maintain adequate funds for this purpose.
To strengthen its capacity, Sunday said the NDIC is seeking an exemption from the policy.
He described MOFI as a critical stakeholder, noting that the Federal Government, through the agency, holds a 40 per cent equity stake in the NDIC.
According to him, continued collaboration is essential to ensure the NDIC meets its obligations to the government while safeguarding depositors’ funds.
In his remarks, Mr Takang commended the NDIC’s spirit of collaboration and its compliance with fiscal regulations.
He assured that MOFI would continue to engage the Federal Ministry of Finance on the NDIC’s behalf, adding that a strong NDIC is vital to maintaining confidence in the financial system.
Both institutions reaffirmed their commitment to cooperation, transparency and accountability.
The federal government’s 50 per cent cost-to-income ratio policy was introduced through a circular dated December 28, 2023, signed by the Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun.
The circular directed federal agencies and parastatals to remit 50 per cent of their internally generated revenue to the Treasury Single Account as part of broader presidential fiscal directives.
The directive, to be implemented by the Office of the Accountant-General of the Federation in early January 2024, builds on existing rules for IGR remittances under the Fiscal Responsibility Act and related circulars, with the aim of improving revenue mobilisation and fiscal discipline across Ministries, Departments and Agencies (MDAs).