The Nigeria Deposit Insurance Corporation (NDIC) on Thursday announced an increase in the maximum deposit insurance coverage levels for all licensed deposit-taking financial institutions with immediate effect.
Speaking at a press conference on the review of maximum deposit insurance coverage level, Managing Director/Chief Executive of the corporation, Mr. Bello Hassan, anounced, for example, a N4.5m or 900% hike in Maximum Deposit Insurance coverage for deposit money banks in the country.
According to him, the increase was approved at the 18th meeting of the NDIC’s Interim Management Committee (IMC), on April 24 and 25, “in line with our commitment to enhancing depositors’ protection, public confidence, financial inclusion, and stability of the financial system.”
Maximum deposit insurance coverage of Deposit Money Banks (DMBs) was adjusted from N500,000 to N5,000,000, providing full coverage of 98.98% of the total depositors compared with the current cover of 89.20%.
“In terms of the value of deposit covered, the revised coverage would increase the value of deposits covered by deposit insurance to 25.37% compared with the current cover of 6.31% of total value of deposits,” Microfinance Banks (MFBs): The increase of the maximum deposit insurance coverage from N200,000 to N2,000,000, would provide full coverage of 99.27% of the total depositors compared with the current level of 98.76% and would increase the value of deposits covered by deposit insurance to 34.43% compared with 14.38% of total value of deposit, currently covered.”
For Primary Mortgage Banks (PMBs), the coverage leve was increased from N500,000 to N2 million, which would provide full coverage of 99.34% of the total depositors compared with the current 97.98%.
This, it said, would increase the value of deposits covered by deposit insurance to 21.04% compared with 10.77% of total value of deposit, currently covered, while that of Payment Service Banks (PSBs) was raised also to N2 million from N500,000 to provide full coverage of 99.99% of the total number of depositors and would increase the value of deposits covered by deposit insurance to 43.10% of the total value deposits from the current cover of 40.60%.
Subscribers of Mobile Money Operators also had their increased from N500,000 to N5 million per subscriber per MMO as the applicable coverage level for depositors of DMBs.
He emphasized 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. 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.”
He stressed that “the adoption of the revised maximum deposit insurance coverage is supported by the Corporation’s current funding, represented by the balances in the various Deposit Insurance Funds (DIFs), expected annual premium collection, enhanced supervision that would reduce the likelihood of bank failures, effective bank resolution frameworks and other funding arrangements provided by the NDIC Act No. 33 of 2023.”
Bello reaffirmed “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.”
