The Managing Director/Chief Executive of the Nigeria Deposit Insurance Corporation, Mr Thompson Sunday, has warned that the Federal Government’s 50 per cent cost-to-income ratio policy is limiting the corporation’s ability to build a strong financial buffer to protect depositors.
He said NDIC complies with the policy but added that “the deductions affect NDIC’s ability to build a strong Deposit Insurance Fund, which is needed to respond effectively to bank failures.”
The statement by NDIC’s Head of the Communication & Public Affairs Department, Hawwau Gambo, on Tuesday, noted that 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, Dr Armstrong Takang, in Abuja.
According to the statement, he stressed that 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 NDIC 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 corporation’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, he said NDIC is seeking an exemption from the policy. Sunday described MOFI as a critical stakeholder, pointing out that the Federal Government, through MOFI, holds a 40 per cent equity stake in NDIC.
He said continued collaboration is essential to ensure NDIC meets its obligations to the government while safeguarding depositors’ funds.
In his remarks, Takang commended 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 NDIC’s behalf, saying 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, directing federal agencies and parastatals to remit 50 per cent of their internally generated revenue to the Treasury Single Account as part of wider presidential fiscal directives.
This directive formed part of the implementation of “Presidential Directives on 50% Automatic Deduction from Internally Generated Revenue of Federal Government Owned Enterprises” and was to be executed by the Office of the Accountant-General of the Federation in early January 2024.
The policy 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.
