The Nigeria Deposit Insurance Corporation (NDIC) says it is reviewing the framework for financial and technical assistance to support banks faced with liquidity and solvency challenges due to the COVID-19 pandemic.
Mr Galadima Gana, the Director, Insurance and Surveillance Department of NDIC, said this at the 2020 workshop for Finance Correspondents Association of Nigeria (FICAN) in Lagos on Tuesday.
Gana, in a lecture titled “The Actions and Impacts of COVID-19 on Resolution Authorities and Deposit Insurers”, said that vulnerability of banks to illiquidity and insolvency grew as a result of the pandemic.
He attributed the weakness of banks to the decrease in businesses and patronage.
He, however, noted that regulatory and supervisory authorities had introduced some measures to tackle the impact of the pandemic on the banking system.
Gana said that the measures included incentives such as interest rate reduction, moratorium, liquidity injection and regulatory forbearance on loan restructuring, among others.
He appraised the condition of the banking industry as generally satisfactory, adding, however, that the impact of the coronavirus pandemic had led to a decline in credit facilities.
The director stressed that the priority of financial regulators was to ensure closer monitoring of banks, while increasing campaign on the safety of bank deposits through sustained public awareness.
In the same vein, Dr Sunday Oluyemi, NDIC’s Director of Research, Policy and International Relations, said that the framework to mitigate the impact of the pandemic included health and social protection, monetary and fiscal policies.
He said that the target of the framework was to flatten the recession, human suffering and bankruptcy curves.
“It is difficult to quantify the full cost of COVID-19 pandemic across jurisdictions.
“The financial stability and policy responses are still evolving; a more coordinated approach globally is required to continually address the massive disruptions caused by the pandemic, given the gradual reopening of economies.
“It is now pertinent, more than ever before, to place emphasis on the need for adjustments to policy measures to reflect the authorities’ desire to enhance the effectiveness of existing measures, in the light of experiences gained with the responses,’’ Oluyemi said.