The Nigeria Deposit Insurance Corporation (NDIC) has raised concerns that a key federal fiscal policy is undermining its capacity to protect depositors and maintain stability in the banking system. The warning was made public on December 31, 2025, as the corporation reviewed the impact of the Federal Government’s 50 per cent cost-to-income ratio policy on its operations.
The policy, introduced in late 2023, requires federal agencies to remit half of their internally generated revenue to the central government. While intended to improve fiscal discipline and boost government revenues, the NDIC argues that the directive is constraining its ability to effectively perform its core mandate of safeguarding depositors’ funds.
According to the NDIC’s Managing Director, Thompson Sunday, the mandatory remittances are weakening the Deposit Insurance Fund (DIF), which serves as the financial buffer used to reimburse depositors in the event of bank failures. He explained that consistent deductions from the corporation’s revenue are limiting its capacity to build sufficient reserves to respond promptly and decisively to potential bank liquidations.
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The NDIC also noted that the policy poses challenges to meeting international best practices. Specifically, the corporation said the funding constraints make it difficult to fully comply with the Core Principles for Effective Deposit Insurance established by the International Association of Deposit Insurers. These principles emphasise the importance of strong, independent funding arrangements to ensure depositor confidence and financial system stability.
In response, the NDIC is seeking a formal exemption from the 50 per cent remittance requirement. The corporation maintains that its funds are not conventional government revenue but specialised resources meant solely for depositor protection. Preserving these funds, it argues, is critical to sustaining public trust in the banking sector, especially during periods of financial stress.
Despite its concerns, the NDIC stressed that it remains committed to complying with existing statutory obligations, including the Fiscal Responsibility Act. However, it emphasised that deposit insurance operations differ significantly from those of typical government agencies.
The corporation currently manages two separate deposit insurance funds—one for universal banks and another for microfinance and mortgage institutions. These funds are designed to ensure timely reimbursement of depositors’ claims. The NDIC warned that continued revenue deductions could weaken these funds, potentially delaying payouts and increasing systemic risk in the event of bank failures.
