Examkin

Question

Difficulty: MediumFinancial System Regulatory Bodies: SEC and NDIC

Following the revocation of a distressed commercial bank's operating license in Nigeria, individual depositors are compensated up to a statutory limit to prevent loss of their savings. Which financial regulatory body is legally mandated to provide this deposit insurance coverage?

  1. A
    Securities and Exchange Commission
  2. Nigeria Deposit Insurance CorporationAnswer
  3. C
    Federal Competition and Consumer Protection Commission
  4. D
    Nigerian Investment Promotion Commission

Answer

The Nigeria Deposit Insurance Corporation (NDIC) is the regulatory agency legally mandated to insure bank deposits and compensate depositors upon bank failure.
The Nigeria Deposit Insurance Corporation (NDIC) is statutorily empowered to insure deposit liabilities of licensed banking institutions in Nigeria, guaranteeing compensation to depositors up to specified statutory limits if a bank fails.

Step-by-Step Solution

1
Identify the primary financial protection function described in the scenario.
The core function is protecting bank depositors against loss by guaranteeing reimbursement up to a legal threshold upon bank failure.
The stem specifies compensating commercial bank account holders following license revocation.
2
Distinguish between the statutory mandates of major Nigerian financial regulatory bodies.
The Nigeria Deposit Insurance Corporation (NDIC) directly insures deposit liabilities, whereas the Securities and Exchange Commission (SEC) oversees capital market securities.
NDIC works alongside the Central Bank of Nigeria to protect banking sector depositors and promote stability.

Key Concept

Functions and Mandate of the Nigeria Deposit Insurance Corporation (NDIC)
Rate this question

Topics

Financial System Regulatory Bodies: SEC and NDIC

More questions from this topic