The Nigeria Deposit Insurance Corporation, NDIC has increased the Maximum Deposit Insurance coverage to N5 million.
This disclosure was made by the Managing Director/CEO of the NDIC, Mr. Bello Hassan at a press conference in Abuja, Thursday.
The measure according to the NDIC Chief Executive is in line with the organization,’s commitment to enhancing depositors protection, public confidence, financial inclusion and stability of the financial system.
The decision to increase the Maximum Deposit Insurance coverage levels for all licensed deposit-taking financial institutions with immediate effect was taken by the corporation’s Interim Management Committee (IMC) at its 18th meeting held on April 24th and 25th, 2024.. Giving the breakdown, Mr. Hassan revealed that ” these adjustments in 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.”
He gave details of the adjustments as – “i. Deposit Money Banks (DMBs): The increase of the maximum deposit insurance coverage from N500,000 to N5,000,000, would provide 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. ii. 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. iii. Primary Mortgage Banks (PMBs): The increase of the maximum deposit insurance coverage from N500,000 to N2,000,000 would provide full coverage of 99.34% of the total depositors compared with the current 97.98% and would increase the value of deposits covered by deposit insurance to 21.04% compared with 10.77% of total value of deposit, currently covered. iv. Payment Service Banks (PSBs): The increase of the maximum deposit insurance coverage from N500,000 to N2,000,000 would 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 of deposits from the current cover of 40.60%. v. Subscribers of Mobile Money Operators: The increase of the maximum 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”
The NDIC boss further maintained that the revised deposit insurance coverage has balanced the corporation’s goals of depositor protection and financial system stability with incentives for depositors to practice market discipline and prevent banks from unnecessary risk-taking and moral hazard.
While revealing 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, Mr Hassan explained that the implementation of revised Maximum Deposit Insurance coverage is backed by Deposit Insurance Funds (DIFs), expected annual premium collection, enhanced supervision, effective bank resolution frameworks and other arrangements provided in the NDIC Act, 2023.
” 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.” He said
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