NDIC Announces Increase in Deposit Insurance Coverage
By Patience Ikpeme
Abuja, Nigeria – In a move to protect depositors and bolster the country’s financial sector, the Nigeria Deposit Insurance Corporation (NDIC) has unveiled a significant increase in deposit insurance coverage for all licensed deposit-taking financial institutions. The announcement, made by NDIC Managing Director/Chief Executive, Bello Hassan, addresses Deposit Money Banks (DMBs), Microfinance Banks (MFBs), Primary Mortgage Banks (PMBs), Payment Service Banks (PSBs), and Mobile Money Operators (MMOs).
Hassan emphasized the importance of this measure, stating, “by increasing deposit insurance coverage, we are ensuring that depositors are better protected in the unlikely event of a bank failure.” This move aims to instill confidence in depositors and strengthen the stability of the banking system.
Under the new coverage, customers of Deposit Money Banks (DMBs) will experience a substantial increase in deposit coverage from N500,000 to N5,000,000, providing full coverage for 98.98 percent of depositors. Microfinance Banks (MFBs) customers will also see an increase from N200,000 to N2,000,000, offering full protection for 99.27 percent of depositors. Primary Mortgage Banks (PMBs) will have their maximum coverage raised from N500,000 to N2,000,000, ensuring full coverage for 99.34 percent of depositors.
For Payment Service Banks (PSBs), depositors will now receive an increased coverage from N500,000 to N2,000,000, providing near-complete protection. Additionally, customers of Mobile Money Operators (MMOs) are set to enjoy maximum Pass-through deposit insurance coverage of N5,000,000 per subscriber per MMO, bringing it in line with DMBs’ coverage.
To reassure depositors, Hassan disclosed that the NDIC has maintained full funds for various types of banks, with the current balances in excess of N2 trillion. This funding ensures the sustainability of the increased coverage and the ability to swiftly pay depositors. In line with global best practices, the NDIC commits to settling customers within seven days.
Regarding the impact on banks, Hassan clarified that the increase in coverage would not necessarily result in higher premiums. The NDIC has transitioned to a risk-based premium framework, where banks effectively managing risks will pay the base rate of 35 basis points. However, those failing to manage risks appropriately may face higher premiums, going up to 65 basis points.
Hassan also urged depositors to patronize only licensed deposit-taking institutions listed on the Central Bank of Nigeria (CBN) and NDIC websites, cautioning against engaging with unlicensed entities to ensure the safety of their deposits.
The enhanced deposit insurance coverage levels take effect immediately, providing Nigerians with greater peace of mind when entrusting their savings to licensed financial institutions. This proactive step by the NDIC is expected to fortify the banking system and foster greater financial inclusion nationwide.
