By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE)-The Nigeria Deposit Insurance Corporation (NDIC) said 64 percent of bank frauds and forgeries in 2014 were largely committed by temporary staff, clerks and tellers.
Umaru Ibrahim, the managing director/chief executive officer (MD/CEO) of NDIC made this disclosure in his keynote address presented at the 2015 workshop organised by the corporation for business editors and finance correspondents on Wednesday in Ilorin, Nigeria with the theme: “Developments in E-Banking, Mobile payments System and Deposit Insurance in Nigeria.”
According to him, the frauds and forgeries were web-based (online banking)/ATM card related fraudulent transfer/withdrawal of deposits amongst others.
He affirmed the causes were also largely traced to weak IT infrastructure, poor internal controls due to prevalence of contract clerks and tellers. The he said requires urgent attention to improve the electronic payments controls, IT security, human capital and integrity profiling as well as motivation of staff.
The NDIC chief said there is no doubt that these developments also require urgent regulatory intervention in order to achieve much desired financial discipline in the banking system and to consolidate on the gains of the various reforms in the industry in line with the wave of change of the present administration in Nigeria.
He said that a total of 10,612 fraud cases in banks were reported in 2014, compared to 3,786 cases in 2013, which showed an increase of 183 percent in the review period.
He disclosed the amount involved in 2013 was N21.80 billion compared to N25.61 billion in 2014 which was a 17.5 percent increase with expected/actual loss increase from N5.76 billion in 2013 to N6.19 billion in 2014.
Ibrahim noted that Section 35 and 36 of the NDIC Act, 2006 mandates all deposit-taking financial institutions to send returns on frauds, forgeries and other financial malpractices to the corporation on monthly basis.
“They are also expected to notify the corporation on any member of staff that has been dismissed or have their appointments terminated or advised to retire on grounds of financial infractions. It is worrisome to note that the banking system has continued to record very high incidences of fraud and forgeries in recent years,” the NDIC boss added.
On financial inclusion, Ibrahim said the NDIC in collaboration with the Central Bank of Nigeria (CBN) had embarked on various public awareness initiatives with a view to drastically reducing the percentage of Nigerians who have no access to any form of financial services from 39 percent to 20 percent by 2020.
“The attention of the regulatory/supervisory authorities and operators has been drawn to this onerous task of focusing our attention to massive public awareness; hence, the rationale behind bringing to the fore the issues of e-banking, capacity of micro, small and medium-scale enterprises in the mobile payments system and effective management of associated risks to mobile payment system and effective management of associated risks to this workshop.
“Other areas of interest include relevance of mobile money services and pass-through deposit insurance, investigations and monitoring of e-banking transactions, role of the media in integration of financial inclusion and education,” he added.
He further affirmed the NDIC, as a leading deposit insurer, has been responding creditably well to emerging developments in the global financial system, particularly the pass-through insurance, financial literacy, consumer protection, financial inclusion, sustainable banking and extension of deposit insurance coverage to depositors of non-interest banking sector.
“The NDIC’s role is to protect the interest of the subscribers of MMOs through reimbursement of their claims in the event of failure of banks where their MMOs maintain their pool accounts. It has so far been observed that majority of the general public is still very much in the dark about the advantages of the mobile banking services, mobile payment systems and pass-through deposit insurance, which therefore calls for intensive public awareness in order to ensure the success of the mobile payment system in Nigeria,” Ibrahim noted.
He listed challenges confronting e-banking, mobile payments and deposit insurance to include inadequate and poor infrastructure arising from lack of constant power supply, poor linkage access roads to remote locations and inadequate telecoms services in most locations and high overhead cost on the part of operators relying on alternative power source to ensure effective and efficient service delivery.
