EVALUATION OF THE IMPACT OF THE NIGERIAN DEPOSIT INSURANCE CORPORATION (NDIC)

CHAPTER ONE

INTRODUCTION

1.1   BACKGROUND OF THE STUDY

The federal government of Nigeria ride decree No 22 established the Nigeria deposit insurance corporation in July 1988, This regulatory institution is set up to insure all deposit liabilities of licensed banks and other financial institutions the NDIC act Capt 301 L.F.N 1998 further stress on the establishment of the NDIC by the federal government to incuse bank deposit protect depositors interest and also help in promoting page and sound banking system and further inculcating banking habit among our people.  The Nigeria deposit insurance corporation is an antonymous regulatory body and has the authority to examine the books and affairs of insured banks and other deposit taking financial institution every licensed bank and other deposit taking financial institution operating in Nigeria are man dated to insure its total deposits. A depositor in a Nigerian deposit insurance corporation insured bank will not pay for the cost of this deposit insurance. It is the insured bank that pays through annual assessment on its volume of such deposits.

The authorized capital of the corporation is N100 million out of which N50million had already been called and paid up by the federal government and central bank of Nigeria banks of Nigeria (CBN) in the ratio of 2.3 the decision by the federal government of Nigeria to establish the NDIC are.

1. To encourage saving by increasing the safely of deposit and ensuring development of banking practice.

2. To refund every insured bank depositor to the maximum tune of N50,000 if this bank is liquidated.

3. To protect the deposit of customers.

In Nigeria today hardly can any year pass by without one hearing of one kind of distress or the other in the banking sector. The problem of distress in the financial sector including outright bank failure was observed in Nigeria as far back as 1930, when the first bank failure was reported. Between 1930 and 1958 when the CBN was established over 21-bank failure was reported the number of banks today classified as problem banks as on the increase and have continued to be of serious concern to depositor government and regulatory authorities.

EVALUATION OF THE IMPACT OF THE NIGERIAN DEPOSIT INSURANCE CORPORATION (NDIC)