By Ifeanyi Onuba, Abuja

Thursday, 25 Nov 2010

The Nigeria Deposit Insurance Corporation, on Wednesday, said that it would soon release the guidelines for implementing the Deposit Insurance Scheme of the proposed Islamic banking model.

Unlike the conventional banking model, the Islamic banking practice is non-interest based.

The NDIC Acting Managing Director, Alhaji Umaru Ibrahim, who disclosed this in Abuja at a one-day workshop on non- interest deposit insurance scheme, noted that, already, a draft framework for the implementation of the scheme had been forwarded to stakeholders for their input.

He said the workshop, with the theme, “Protecting depositors to build confidence in non-interest (Islamic) banking in Nigeria,” was part of the efforts aimed at helping the corporation achieve that objective.

Ibrahim noted that the current efforts to establish the non-interest banking in the country had been in consonance with the principle of financial inclusion, adding that, with the high interest rate in the country, the model would be a viable alternative to conventional banking.

He said, “Right from the inception, the NDIC was designed as a risk minimiser and not merely a pay box. We have thought it fit at this crucial moment to design a non-interest deposit insurance scheme in view of the realisation that non- interest banks will be involved in deposit-taking whenever they are licensed and they commence operations.

“This seminar is one out of several initiatives on the part of the corporation to prepare its staff and indeed stakeholders for the successful implementation of non-interest deposit insurance scheme in Nigeria.”

Ibrahim also said that the corporation had already developed a draft framework for the implementation of the NDIS in Nigeria, adding that it had “been forwarded as a consultative paper to our stakeholders for their comments and we have received encouraging comments from a lot of the insured institutions.”

The NDIC boss argued that the corporation’s determination to extend deposit insurance cover to non-interest banks was in line with its statutory mandate and the new banking licensing regime of the Central Bank of Nigeria.

The Chairman, Senate Committee on Banking and Other Financial Institutions, Senator Nkechi Nwaogwu, was confident that the model, when fully adopted, would help to drive down the high interest rate in the country.

Source: Punch