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NDIC increases maximum deposit insurance coverage to N5m

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COMFORT EKELEME, Business Editor

 

The Nigeria Deposit Insurance Corporation (NDIC) has increased the maximum deposit insurance coverage levels for Deposit Money Banks (DMBs) from N500,000 to N5 million.

 

Managing Director/Chief Executive of NDIC, Mr. Bello Hassan disclosed this Thursday while briefing Newsmen on the review of the maximum deposit insurance coverage level.

 

He said the increase of the maximum deposit insurance coverage from N500,000 to N5,000,000, would provide full coverage of 98.98per cent of the total depositors compared with the current cover of 89.20per cent.

 

In terms of the value of deposit covered, Mr. Hassan said the revised coverage would increase the value of deposits covered by deposit insurance to 25.37per cent compared with the current cover of 6.31per cent of total value of deposits.

 

For the Microfinance Finance Banks (MFBs), he said, the increase of the maximum deposit insurance coverage from N200,000 to N2,000,000, would provide full coverage of 99.27per cent of the total depositors compared with the current level of 98.76per cent and would increase the value of deposits covered by deposit insurance to 34.43per cent compared with 14.38per cent of total value of deposit, currently covered.

 

The NDIC boss further disclosed that the increase maximum deposit insurance coverage of Primary Mortgage Banks (PMBs) from N500,000 to N2,000,000 for  Primary Mortgage Banks (PMBs) would provide full coverage of 99.34per cent of the total depositors compared with the current 97.98per cent and would increase the value of deposits covered by deposit insurance to 21.04per cent compared with 10.77 per cent of total value of deposit, currently covered.

 

According to him,  the he increase of the maximum deposit insurance coverage from N500,000 to N2,000,000 for Payment Service Banks (PSBs)  would provide full coverage of 99.99per cent of the total number of depositors and would increase the value of deposits covered by deposit insurance to 43.10per cent of the total value deposits from the current cover of 40.60per cent.

 

For the subscribers of Mobile Money Operators, the NDIC increased 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.

 

Mr. Hassan said, “I must emphasise 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.

 

“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.

 

The NDIC boss reaffirm the corporation’s unwavering commitment to protecting depositors and contributing to the stability of the financial system.

 

He said “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.

 

 

 

 

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