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The Nigeria Deposit Insurance Corporation (NDIC) has raised concerns that the Federal Government’s 50 per cent cost-to-income ratio policy is constraining its capacity to build a robust financial buffer needed to protect bank depositors.
The Managing Director and Chief Executive of NDIC, Mr Thompson Sunday, said while the corporation fully complies with the policy, the mandatory deductions are limiting the growth of the Deposit Insurance Fund, which is critical for responding effectively to bank failures.
In a statement issued on Tuesday by the NDIC’s Head of Communication and Public Affairs, Hawwau Gambo, Sunday made the remarks during a courtesy visit to the Managing Director and Chief Executive of the Ministry of Finance Incorporated (MOFI), Dr Armstrong Takang, in Abuja.
According to the statement, Sunday reaffirmed NDIC’s adherence to all applicable fiscal and financial regulations, including the Fiscal Responsibility Act of 2007. He noted that the corporation meets its statutory remittance obligations by paying either 20 per cent of gross earnings or 80 per cent of net surplus to the Federal Government, as required, and consistently submits its financial statements ahead of statutory deadlines.
He said this commitment to transparency and accountability aligns with NDIC’s mandate as a core financial safety-net institution responsible for protecting depositors and sustaining confidence in the banking system.
However, Sunday cautioned that compliance with the Federal Government’s 50 per cent cost-to-income ratio policy comes with operational challenges. He explained that the policy reduces NDIC’s ability to accumulate sufficient reserves in the Deposit Insurance Fund, which is essential for prompt and independent resolution of bank failures without recourse to government support.
He added that global best practices, as outlined in the Core Principles for Effective Deposit Insurance issued by the International Association of Deposit Insurers, require deposit insurers to maintain adequate funding to discharge their responsibilities effectively.
To address this constraint, Sunday disclosed that NDIC is seeking an exemption from the policy. He described MOFI as a critical stakeholder, noting that the Federal Government, through MOFI, holds a 40 per cent equity stake in NDIC. According to him, sustained collaboration is necessary to balance NDIC’s obligations to government with its primary responsibility of safeguarding depositors’ funds.
In his response, MOFI’s Managing Director, Dr Armstrong Takang, commended NDIC’s cooperative approach and its consistent compliance with fiscal regulations. He assured that MOFI would continue to engage with the Federal Ministry of Finance on NDIC’s concerns, emphasising that a financially strong NDIC is essential for maintaining stability and confidence in the financial system.
Both institutions reaffirmed their commitment to transparency, accountability, and continued collaboration in support of Nigeria’s financial safety-net framework.
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 directive requires federal agencies and government-owned enterprises to remit 50 per cent of their internally generated revenue to the Treasury Single Account as part of broader presidential fiscal measures.
The policy, implemented by the Office of the Accountant-General of the Federation from January 2024, builds on existing remittance requirements under the Fiscal Responsibility Act and related guidelines, and is aimed at strengthening revenue mobilisation and enforcing fiscal discipline across Ministries, Departments and Agencies.
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