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Difficulty: MediumFinancial System Regulatory Bodies: SEC and NDIC

Following the revocation of a licensed commercial bank's operating license due to insolvency, bank customers are concerned about recovering their savings. Which financial regulatory body is statutorily mandated to guarantee the payout of insured funds to depositors and supervise the liquidation of the bank's assets?

  1. Nigeria Deposit Insurance Corporation (NDIC)Answer
  2. B
    Securities and Exchange Commission (SEC)
  3. C
    Debt Management Office (DMO)
  4. D
    Financial Reporting Council of Nigeria (FRCN)

Answer

The Nigeria Deposit Insurance Corporation (NDIC) is the regulatory body responsible for insuring deposit liabilities and supervising bank liquidation.
The Nigeria Deposit Insurance Corporation (NDIC) is statutorily empowered to insure all deposit liabilities of licensed banks, provide financial assistance to distressed banks, and act as the official liquidator when a bank's operating license is revoked.

Step-by-Step Solution

1
Identify the core regulatory problem in the stem
The issue involves protecting commercial bank depositors and handling bank liquidation following insolvency.
Regulatory bodies in the financial system have clearly demarcated statutory functions.
2
Distinguish between regulatory jurisdictions (SEC vs. NDIC vs. CBN)
SEC regulates capital markets (shares, bonds, stock exchange); NDIC insures bank deposits and handles distressed bank liquidations.
NDIC was specifically established to complement the Central Bank of Nigeria by providing a safety net for bank depositors.

Key Concept

Functions of Financial System Regulatory Bodies: NDIC vs. SEC
Estimated Time:1m 0s
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Topics

Financial System Regulatory Bodies: SEC and NDIC

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