The World Bank has commended the Nigeria Deposit Insurance Corporation for its Target Fund Ratio Framework which enables the corporation to meet its obligation to depositors.
A statement by the corporation quoted the Head, Technical Team, World Bank, Mr. Julian Casal, as saying this after a four-day working visit to the NDIC for a formal presentation of the Target Fund Ratio Framework and capacity building for the staff of the corporation.
Casal said that the NDIC’s Target Fund Ratio Framework was suitable in determining the adequacy of the corporation’s Deposit Insurance Fund, adding that the framework was a model that could be adopted as benchmark for other African deposit insurance corporations.
The statement quoted the Managing Director, NDIC, Alhaji 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.
The World Bank team comprised of Mr. Jan Philipp Nolte and Mr. John O’Keefe. The team interacted with the NDIC staff members from relevant departments with a view to clarifying the data and other issues considered in establishing the target fund ratio framework
They also interacted with other stakeholders in the banking sector, including officials of the Central Bank of Nigeria and Asset Management Corporation of Nigeria on issues relating to banking supervision and distress resolution.
The Target Fund Ratio is the ratio of fund that determines the optimal fund level that enables a deposit insurer to effectively meet its obligation to depositors.
Under the International Association of Deposit Insurers Core Principle 11 for effective deposit insurance system, ‘the Fund Reserve Ratio should be based on clear, consistent and well developed criteria’.
The statement noted that 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.’
The corporation had been advised to comply with some core principles, among which was Core Principle 11 on funding.
By Dike Onwuamaeze