By Uche Amunike
The Nigeria Deposit Insurance Corporation (NDIC) has announced an increase of the deposit insurance coverage for every bank operating in the country.
Speaking, during a media briefing held in Abuja, the Managing Director of NDIC, Bello Hassan, disclosed the new coverage benchmarks. He explained that the NDIC for deposit money banks is now raised from N500,000 to N5m; micro finance banks from N200,000 to N2m; primary mortgage banks from N500,000 to N2m, while Mobile Money Operators subscribers’ pass-through is from N500,000 to N5m per subscriber.
He reiterated that the essence of the update was to bolster deposited safety, the inclusivity of financial services, public trust, and also the overall stability of the financial sector. He also made it clear that the increase in the maximum deposit insurance coverage levels for every licensed deposit, taking financial institution, takes immediate effect.
According to the NDIC, the increase of the maximum deposit insurance coverage of deposit money banks from N500,000 to N5m will provide complete coverage of 98.98% of the total depositors, compared with the current cover of 89.20%.
As regards the value of deposits covered, the revised coverage increased the value of deposit covered by deposit insurance to 25.37% compared with the current cover of 6.31% of the total value of deposits.
The increase of the maximum deposit insurance coverage of Microfinance banks from N200,000 to N2m will provide full coverage of 99.27% of the total depositors, compared with the current level of 98.76% and will also increase the value of deposits, covered by deposit insurance to 34.43% compared with 14.38% of the total value of the deposit covered.
As for the PMBs, the increase of the maximum deposit insurance from N500,000 to N2m will provide full coverage of 99.34% of the total of depositors compared with the current 97.98% and will increase the value of deposit covered by deposit insurance to 21.04%, compared with 10.77% of the total value of the deposit which is currently covered.
On the part of PSBs, the increase of their maximum deposit insurance coverage from N500,000 to N2m will provide full coverage of 99.99% of the total number of depositors, while increasing the value deposit covered by deposit insurance to 43.10% of the total value deposits from the currently covered 40.60%.
The increase of the maximum pass-through deposit insurance for subscribers of mobile money operators coverage from N500,000 to N5m per subscriber per MMO is the applicable coverage level for depositors of DMBS. The coverage ceiling was raised from N50,000 to N200,000 in 2006. For the first time, the coverage limit of hundred thousand dollars was also set for MFB and PMB depositors in the same year.
In 2011, the coverage limits for DMBs increased from N200,000 to N500,000 and from N100,000 to N200,000 for deposit of MFB and PMBs.
According to Hassan, the coverage level was also adjusted to N500,000 in 2016 for PMB depositors, alongside subscribers of licensed mobile money operators. N500,000 coverage was also extended to depositors of PSBs in 2020, even as DMBS coverage stuck to N500,000.
His words: ‘As part of the periodic evaluation of the effectiveness of the deposit guarantee, the corporation conducted a study in 2023, to determine the adequacy of the Maximum Deposit Insurance Coverage.’
‘This is in line with Principle 8 of the International Association of Deposit Insurers Core Principles for Effective Deposit Insurance, which advised jurisdictions, to periodically review their deposit insurance coverage, to ensure that, it is credible and covers a large majority of depositors to prevent the risk of bank runs, but leave a substantial amount of deposits exposed to market discipline,’ he stated.
