The growth of Nigeria’s Deposit Insurance Fund has exceeded N2 trillion, enabling the Nigeria Deposit Insurance Corporation (NDIC) to strengthen the safeguards it offers to depositors at financial institutions that have licenses.
Bello Hassan, the Managing Director/Chief Executive of NDIC in Abuja, announced this increase, which is a proactive step toward strengthening the financial safety net.
The infusion of cash represents a turning point in Nigeria’s financial landscape and consists of balances from four deposit insurance funds maintained by NDIC, which include Deposit Money Banks (DMBs), Primary Mortgage Banks, microfinance banks, non-interest banks, and payment service banks.
The NDIC has increased the maximum deposit insurance coverage for DMBs from N500,000 to N5,000,000. This change takes effect immediately. With this improvement, 98% of depositors are fully covered, a significant increase over the prior 89.20%.
Microfinance Banks (MFBs) have also undergone a parallel adjustment, with coverage increased from N200,000 to N2,000,000, guaranteeing safety for 99.27% of depositors.
Additionally, coverage for Primary Mortgage Banks (PMBs) increased from N500,000 to N2,000,000, protecting 99.34% of depositors. Additionally, the coverage of Payment Service Banks (PSBs) is increased from N500,000 to N2,000,000, giving 99.99% of depositors peace of mind.
Hassan highlighted that the updated coverage is in line with the NDIC’s mission to strengthen financial stability, increase public trust, safeguard depositors, and encourage financial inclusion. The decision was made after a careful analysis by the NDIC’s Interim Management Committee, which took into account variables like GDP per capita, inflation, and exchange rates.
Hassan emphasized the need to strike a balance between deposit protection and financial stability in response to worries about moral hazard. He guarantees that even with its limitations, the coverage is still sufficient to protect the great majority of depositors and discourage banks from taking careless risks.
Regarding the wait times for unpaid debts to bank depositors who were liquidated, he guaranteed that, as shown in previous cases, technology would be used to make payments quickly. He restates the NDIC’s dedication to improving procedures to guarantee prompt and effective settlements.
Most importantly, the assessment did not call for raising banks’ yearly premiums. The NDIC used a risk-based premium system, determining each bank’s premium according to how much risk is deemed to be there. Reducing premium costs through effective risk management encourages ethical banking activities.
