Amidst the calls for an upward review of the maximum coverage limit for bank depositors in the country, Managing Director and Chief Executive of the Nigeria Deposit Insurance Corporation (NDIC), Bello Hassan, on Tuesday insisted that the current deposit insurance coverage limits of N500,000 per depositor per commercial, merchant and, non-interest bank, primary mortgage bank and mobile money operator, as well as N200,000 for microfinance banks, are the most adequate and robust in the world.
In a keynote address at the opening of the 18th edition of the workshop for business editors and members of the Finance Correspondents Association of Nigeria (FICAN), in
Gombe, the MD/CE noted that the limits which were last raised 11 years ago in 2010, are also consistent with the extant provisions and recommendations of the International Association of Deposit Insurers (IADI).
Speaking on the theme “Enduring Extreme Disruptions: Resilience & Reinvention for Banking System Stability and Deposit Insurance,” he recalled that “in 2016, 2017, 2018 and 2019, the total number of accounts in the deposit money banks stood at 83.0 million; 99.1 million; 112 million and 128.4 million respectively. Out of these numbers, the N500,000 coverage limit fully covered 99.4%;97.6%; 97.5% and 97.6% of accounts, respectively.”
What these figures entail, he continued, “is that only less than 3% of accounts/depositors are not fully covered by the prevailing coverage limits. The implication of this is that in the event of failure of a bank, above 97% of depositors would be fully covered by the Corporation.”
The current amounts, he continued, also meet the IADI Core Principle No. 8, which requires that coverage threshold “should be limited, credible with the capacity to fully cover substantial majority of bank depositors while the rest remain exposed to ensure market discipline. Deposit insurance coverage should also be consistent with the deposit insurance system’s public policy objective.”
Nonetheless, he stressed that the coverage limits are not designed to be static but subject to periodic upward reviews as was done when it was increased from N50,000 at inception in 1989 to N200,000 in 2006, and N500,000 in 2010.
The issue of the NDIC’s deposit insurance coverage limits, he stressed, has always been misunderstood by stakeholders, despite being very fundamental and in need of thorough interrogation in the interest of all depositors, hence the need for his explanation to enhance better understanding of the issue among newsmen, members of the civil society groups, and officials of the insured financial institutions. “Much of the concerns are predicated on the lack of adequate understanding of the principles, rationale and realities that informed the determination of our coverage limits,” he continued, urging the media to educate Nigerian depositors on the issues.
