The Nigeria Deposit Insurance Corporation (NDIC) has emphasised the critical role of the Judiciary in ensuring financial system stability, stating that stronger collaboration with the Judiciary is essential to safeguarding depositors and maintaining public confidence in the banking sector.
According to the Corporation, its strategic partnership with the Judiciary plays a key role in protecting depositors and sustaining trust in Nigeria’s financial system.
Speaking at a sensitisation seminar in Lagos for Judges of the National Industrial Court and members of the Investments and Securities Tribunal, Emily Osuji, acting Managing Director of the NDIC, noted that the Corporation’s operations rely significantly on the resolution of legal issues surrounding failed banks.
“Our mandate to protect depositors and promote stability in the financial system depends heavily on the timely and effective adjudication of banking-related cases.
“The judiciary is a critical stakeholder in our effort to maintain financial system stability,” Osuji said.
“Cases involving severance packages, outstanding salary arrears, and exit packages for former employees of banks undergoing liquidation warrant careful consideration. It is important for judges of the National Industrial Court to re-examine the priority of claims as stipulated under the NDIC Act, 2023, when adjudicating such matters”, Osuji added.
The seminar, organised in partnership with the National Judicial Institute (NJI), focused on improving legal understanding of NDIC’s role and building capacity for handling financial disputes.
Osuji explained that legal delays often affect the Corporation’s ability to wind up failed banks efficiently. “Employment cases initiated by former staff of failed banks against the Nigeria Deposit Insurance Corporation, particularly those litigated before the National Industrial Court, present a significant challenge to the NDIC’s mandate of liquidation,” she added.
According to her, these Court rulings sometimes disrupt the statutory order of payments, leading to confusion and affecting the confidence of depositors.
“We are not saying staff should not be paid, but we want the courts to follow the legal framework which places depositors first, followed by other creditors, staff, and shareholders based on available funds,” she said.
Senior legal professionals at the seminar supported NDIC’s concerns and highlighted the broader impact of delayed or inconsistent rulings.
Ahmed Raji, a Senior Advocate of Nigeria and Principal at Ahmed Raji & Co, said that investment-related disputes must be handled quickly.
“One of the areas of consensus is the need to fast-track and to make sure that investment disputes do not linger,” he said. “Otherwise, it will discourage investors, and it will make, especially foreign investors, not see this one as a good destination to come and invest”, he added.
He also discussed a paper by Abubakar Mahmoud on how the Investment and Securities Tribunal could play a stronger role in protecting depositors. “The tribunal laws give it the power to look into complaints around investments and resolve cases efficiently, but it must be supported to deliver on this role,” Raji said.
The NDIC, which was created to insure deposits and protect bank customers, has handled several bank closures in its 37-year history. Osuji noted that the closure of Heritage Bank was done in an orderly manner, but lawsuits from former staff still presented challenges. “While we have achieved some progress, especially with the closure of Heritage Bank, court judgments can hinder our liquidation process and affect our ability to recover and redistribute funds properly,” she said.
Justice Abdullahi, Administrator of the National Judicial Institute, said the collaboration between the Judiciary and NDIC is important for the country’s financial health. “It is imperative for judicial officers to comprehend not only the technicalities of financial laws but also their far-reaching implications on economic stability,” he said.
“Digital banking, cryptocurrency, and decentralised finance have introduced new dimensions to financial transactions, prompting regulators to adapt swiftly. These developments necessitate a judiciary that is forward-thinking and adaptable”, he added.
Amos Azi, Chairman of the Investments and Securities Tribunal, explained that the Tribunal has the legal mandate to conclude capital market disputes within 90 days. “Our job is to build confidence in the financial sector. Quick and fair resolution of disputes is key. Investors want to know that if something goes wrong, their complaints will be heard and resolved quickly”, he noted.
