Examination of the law relating to protection of bank deposits, liquidation and winding-up of banks in Nigeria

This paper is written against the background of frequent bank failures, mergers and winding-up of banks which have caused a great deal of apprehension in the minds of bank customers, depositors and creditors in Nigeria. The paper therefore is aimed at interrogating the legislative intervention in this regard and in particular the role that the Nigeria Deposit Insurance Act has played in mitigating the uncertainty and hardship that has been occasioned by incessant bank failures in the country. The method of research here is the use of the NDIC Act and other related legislation as primary sources of research in addition to secondary sources such as works authored by legal scholars. The paper has found that legislative intervention has reduced the incidents of bank failure and also offered a number of protections to bank customers and their deposits. The paper has however, discovered shortcomings in the law that need to be amended if bank deposits are to be accorded adequate protection in the event of liquidation or winding up. It has therefore recommended, among other things, the proportionate repayment of bank deposits in the event of liquidation, intensification of the work of bank examiners, and increased penal sanctions on bank directors and senior management staff whose actions cause bank failure. The overall implication of the study is that when its recommendations are implemented there would be greater confidence and stability in the banking sector which would in turn boost economic growth in the country.