NDIC Warns Banks Against Covering Up Insider Abuse, Threatens Criminal Action

• NDIC says banks that conceal insider abuses, including improperly granted or non-performing loans, could face criminal enforcement under BOFIA.

• The regulator urged bank staff, lawyers and other stakeholders to report information on insider assets and transactions that could help expose financial misconduct.

• NDIC said its deposit insurance currently covers deposits of up to ₦5 million for about 98 percent of depositors, shielding most small savers when banks fail.

August 26, () — The Nigeria Deposit Insurance Corporation (NDIC) has warned banks against concealing insider abuses and other criminal conduct, saying institutions that shield offenders could face enforcement under the Banks and Other Financial Institutions Act (BOFIA).

The warning was issued by NDIC’s Head of Legal Unit, Oladipo Kushimo, during a breakout session titled “Too Big to Fail?” at the Nigerian Bar Association’s Annual General Conference in Port Harcourt.

Kushimo said the regulator had encountered instances where banks failed to properly disclose offences involving insiders, particularly abuses linked to loans that were improperly granted or subsequently became non-performing.

“Sometimes you find out that the bank covers the offence. It is one of the experiences of the regulator, and it is necessary to stem such practices and maintain financial sustainability”, he said.

NDIC Threatens Criminal Enforcement

Kushimo said NDIC has criminal enforcement powers under existing banking legislation and would deploy them where institutions or individuals were found to have compromised the banking system.

He urged lawyers, bank employees and other stakeholders with information about insider abuse to share it with the corporation, including information about properties, software and other assets linked to bank directors or other insiders.

“If you have a record of any insider, you can submit that to the regulator. Tell us; write to us, NDIC”, he said.

The disclosures, he added, could help the corporation identify what went wrong during its examinations, establish responsibility and determine whether criminal conduct occurred.

Where necessary, cases can subsequently be referred to relevant law-enforcement agencies for prosecution.

Kushimo acknowledged that sophisticated financial crimes can be difficult to detect but said the corporation was strengthening its ability to identify and pursue such offences.

Small Depositors Remain Largely Protected

The NDIC official also explained the role of deposit insurance in protecting bank customers when financial institutions fail.

He said insured deposits of up to ₦5 million cover about 98 percent of depositors, meaning the vast majority of depositors fall within the corporation’s coverage.

“The essence of deposit insurance is to protect the low depositors, the street market, you and I, so that at the end of the day, our savings are not lost”, he said.

The protection is particularly important during bank failures, as deposit insurance is designed to provide a safety net for eligible depositors rather than expose them entirely to the consequences of a bank’s collapse.

Financial Stability Depends On Stronger Oversight

Kushimo also linked banking-sector stability to broader monetary and economic conditions, saying interest rates and lending decisions should be viewed within the wider framework of inflation, money supply and monetary policy.

He said the Central Bank of Nigeria periodically reviews monetary conditions in determining policies aimed at maintaining financial stability.

The comments reinforce the importance of strong internal controls and regulatory oversight as Nigeria’s banking sector expands its lending activities.

For banks, the warning also carries a broader message: concealing misconduct may expose the institution itself to regulatory and criminal consequences, rather than protecting it from reputational or financial damage.

NDIC said its mandate extends beyond protecting depositors to investigating failures, identifying those responsible for infractions and pursuing appropriate action against parties whose conduct threatens the integrity of the financial system.