NDIC jerks deposit insurance cover for banks to N5m, MFBs N2m

 

The Nigeria Deposit Insurance Corporation (NDIC) has reviewed upward the deposit guarantee, covering depositors of all deposit money banks and other financial institutions licensed by the Central Bank of Nigeria.

Speaking at the press conference on Thursday, the Managing Director/Chief Executive of NDIC, Mr Bello Hassan said minimum deposit insurance coverage for deposit money bank (DMB) has increased from N500,000 to N5,000,000 as it will provide full coverage of 98.98 per cent of the total depositors compared with the current cover of 89.20 per cent. In terms of the value of deposit covered, he said the revised coverage would increase the value of deposits covered by deposit insurance to 25.37 per cent compared with the current cover of 6.31 per cent of total value of deposits. 

He also said that Microfinance Banks (MFBs):  deposit insurance coverage has been from N200,000 to N2,000,000 and it would provide full coverage of 99.27 per cent  of the total depositors compared with the current level of 98.76 per cent and would increase the value of deposits covered by deposit insurance to 34.43 per cent  against  with 14.38 per cent of total value of deposit, currently covered. 

For Primary Mortgage Banks (PMBs), he said maximum deposit insurance coverage surged from N500,000 to N2,000,000 and it would provide full coverage of 99.34 per cent of the total depositors compared with the current 97.98 per cent and would as well increase the value of deposits covered by deposit insurance to 21.04 per cent  from 10.77 per cent of total value of deposit, currently covered.

The NDIC boss, however said that Payment Service Banks (PSBs) insurance cover  reviewed upward from  the current  N500,000 to N2,000,000 and would provide full coverage of 99.99 per cent of the total number of depositors and would increase the value of deposits covered by deposit insurance to 43.10 per cent of the total value deposits from the current cover of 40.60 per cent.

He stated that the Subscribers of Mobile Money Operators maximum deposit coverage pass-through deposit insurance coverage from N500, 000 to N5,000,000 per subscriber per MMO as the applicable coverage level for depositors of DMBs. 

He emphasised that the revised deposit insurance coverage has balanced the NDIC’s goals of deposit protection and financial system stability with incentives for depositors to practice market discipline and prevent banks from unnecessary risk-taking and moral hazard. 

He said that consideration was given to ensure that the coverage was limited but adequate enough to protect a large number of depositors and credible enough to prevent the destabilizing effect of bank runs.

Bello will like to reaffirm the NDIC’s unwavering commitment to protecting depositors and contributing to the stability of the financial system. These adjustments to the maximum deposit insurance coverage reflect our dedication to adapt and evolve in response to the changing landscape of the financial industry, and we remain steadfast in our pursuit of a secure and resilient banking environment for all. 

Meanwhile, the NDIC’s mandate of Deposit Guarantee is a critical component of depositors’ protection, as it guarantees the payment of deposits up to a maximum set limit in the event of bank failure. 

This deposit guarantee covers depositors of all deposit taking financial institutions licensed by the Central Bank of Nigeria, which includes Deposit Money Banks (DMBs), Microfinance Banks (MFBs), Primary Mortgage Banks (PMBs), Non-Interest Banks (NIBs), Payment Service Banks (PSBs) and subscribers of Mobile Money Operators.  The corporation said that the maximum deposit.