World Bank
The World Bank has described the
Target Fund Ratio Framework, TFRF, of the Nigeria Deposit Insurance
Corporation, NDIC, as a model which should be emulated by other deposit
insurance institutions across the globe. Mr Julian Casal who led the World Bank
technical team on a 4-day working visit to the corporation on a formal
presentation of the Target Fund Ratio Framework and staff capacity building
said that each deposit insurer needed a robust fund with which to meet demands
of its mandate.
According to him, the NDIC’s TFRF
was suitable in determining the adequacy of the Corporation’s Deposit Insurance
Fund (DIF) He said that the bank would adopt the document as a benchmark for
other African deposit insurance Corporations. Responding, the NDIC’s Managing
Director of NDIC, Alh. Umaru Ibrahim expressed appreciation to the World Bank
for its continuous support towards the Corporation’s capacity building
initiative and effective discharge of its mandate.
He assured that the corporation
would continue to welcome inputs from the global institution towards creating
an atmosphere of confidence in the Nigerian banking industry.
TFRF is the ratio of fund that
determines the optimal fund level that enables a deposit insurer to effectively
meet its obligation to depositors. The International Association of Deposit
Insurers (IADI) Core Principle 11 for Effective Deposit Insurance System,
provides that the Fund Reserve Ratio should be based on clear, consistent and
well developed criteria.
The development of the Target
Fund Ratio by the Corporation was premised on the recommendation at the end of
an IADI international workshop on the “Methodology for Assessing Compliance
with the IADI Core Principles for effective deposit insurance system which was
hosted by the Corporation in 2011.
The Corporation was advised to
comply with some Core Principles, among which was Core Principle 11 on funding.
Consequently, the Corporation approached the World Bank for technical
assistance towards the development of the Target Fund Ratio and the request was
granted in 2014 under the World Bank Financial Sector Reform and Strengthening
(FIRST) Initiative.
The World Bank team, comprising
Messrs Julian Casal, Jan Philipp Nolte and John O’Keefe interacted with the
NDIC staff from relevant departments with a view to clarifying the data and
other issues considered in establishing the target fund ratio framework.
By Emma Ujah, Abuja Bureau Chief
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