As the global financial system continues to evolve amid digital transformation and economic shocks, the need for robust safety nets to protect depositors and maintain financial stability has never been more crucial.
In response to these developments, the Nigeria Deposit Insurance Corporation (NDIC) is championing the ongoing revision of the International Association of Deposit Insurers (IADI) Core Principles for Effective Deposit Insurance Systems, a move that underscores the country’s commitment to aligning with international best practices.
The proposed revision, launched by IADI in May 2025, marks a significant milestone in global financial regulation and is a proactive response to major shifts in the banking landscape, particularly those revealed during the March 2023 banking crisis, the most severe since the global financial crisis of 2007–2009.
These updates aim to equip deposit insurers with the tools necessary to navigate increasingly complex financial environments, including the rise of digital banking, crypto-assets, and the expanded role of insurers in bank resolution.
The IADI Core Principles serve as a universal benchmark for jurisdictions seeking to assess and enhance the effectiveness of their deposit insurance systems. They provide a framework of 16 principles that cover everything from the public policy objectives of deposit insurance to governance, reimbursement, and resolution mechanisms.
Since their initial publication in June 2009 by IADI and the Basel Committee on Banking Supervision (BCBS), the Core Principles have become a cornerstone of financial sector assessments carried out by the International Monetary Fund (IMF) and the World Bank. Nigeria, through the NDIC, has consistently relied on these principles to guide its operations and policy formulation, ensuring that the country’s deposit insurance system remains credible and resilient.
With the growth of digital banking, neobank platforms, and crypto-based savings products is redefining the boundaries of traditional banking, it is evident that the financial services ecosystem is undergoing change. At the same time, the role of deposit insurers is expanding beyond mere payout agents to include proactive roles in early intervention and resolution of distressed institutions.
The revised IADI Core Principles are being recalibrated to reflect these realities. Among which are enhanced recognition of digital financial services and their implications for depositor protection, clarity on the role of deposit insurers in crisis resolution, particularly in the event of systemic stress and emphasis on transparency, communication, and public awareness, to maintain depositor confidence in a volatile financial environment.
For Nigeria, where fintech adoption is surging and millions of new users are entering the formal financial system via digital platforms, these revisions are critical to ensuring no depositor is left behind, regardless of the channel through which they access financial services.
The NDIC’s decision to call for comments from financial industry stakeholders, policymakers, and the public demonstrates its inclusive approach to shaping an effective deposit insurance regime. This consultation process ensures that the revised principles will reflect local realities while maintaining alignment with international best practices.
Under its current mandate, the NDIC provides deposit insurance coverage to all licensed deposit-taking financial institutions in Nigeria, including commercial banks, microfinance banks, mortgage banks, and payment service banks.
The Corporation has continuously evolved in line with global standards, and its adherence to IADI’s Core Principles has been instrumental in maintaining depositor confidence, especially during periods of economic uncertainty.
By actively participating in the global conversation around the Core Principles, the NDIC is not only reinforcing its leadership in deposit protection across Africa but also future-proofing Nigeria’s financial stability architecture.
The benefits of implementing the IADI Core Principles in Nigeria extend beyond regulatory compliance, they serve as a strategic tool for economic resilience and inclusive growth. Some of the most significant advantages include enhanced financial stability.
By aligning with globally accepted standards, the NDIC strengthens Nigeria’s overall financial stability framework. The Core Principles ensure that deposit insurance is well-integrated with prudential regulation, resolution frameworks, and central banking functions, thereby reducing the likelihood of bank failures and contagion.
Another benefit is increased depositor confidence as a well-functioning deposit insurance system reassures depositors that their savings are protected up to a certain limit in the event of bank failure. This boosts trust in the formal financial system, encouraging savings, financial inclusion, and investment.
It also engenders improved crisis preparedness as the revised Core Principles emphasise the importance of early intervention and effective resolution regimes, both of which are crucial in minimizing systemic risks. With clear mandates and well-defined roles, deposit insurers can act swiftly to contain bank distress before it spreads.
The IADI Core Principles also supports financial innovation with the emphasis on digital transformation within the Core Principles which allows regulators to better accommodate innovative financial services. This ensures that emerging technologies, such as mobile banking and digital wallets, fall within the protective scope of deposit insurance frameworks.
Adherence to IADI’s Core Principles signals to international investors, development partners, and financial markets that Nigeria has a sound and reliable safety net giving international credibiltiy. This credibility can enhance foreign investment and improve the country’s access to international financial support.
The IADI’s review of its Core Principles is both timely and necessary. For Nigeria, it is an opportunity to build on past successes and address emerging vulnerabilities, especially as the country deepens its commitment to financial digitisation.
