The Nigeria Deposit Insurance Corporation (NDIC) has increased the maximum deposit insurance coverage levels for all licensed deposit-taking financial institutions with immediate effect.
The NDIC Managing Director, Bello Hassan, disclosed this Thursday at a press conference.
He noted that the NDIC’s Interim Management Committee (IMC) approved the adjustments during its 18th meeting on 24 and 25 April.
For commercial banks, NDIC increased the coverage from N500 thousand to N5 million offering full protection to 98.98 per cent of depositors, compared to the previous 89.20 per cent.
This adjustment substantially increases the value of deposits covered, reinforcing depositor confidence and mitigating the risk of bank runs.
“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 per cent of the total depositors compared with the current cover of 89.20 per cent.
“In terms of the value of deposit covered, the revised coverage would increase the value of deposits covered by deposit insurance to 25.37 per cent compared with the current cover of 6.31 per cent of the total value of deposits,” he said.
Article Page with Financial Support Promotion
Support PREMIUM TIMES’ journalism of integrity and credibility
At Premium Times, we firmly believe in the importance of high-quality journalism. Recognizing that not everyone can afford costly news subscriptions, we are dedicated to delivering meticulously researched, fact-checked news that remains freely accessible to all.
Whether you turn to Premium Times for daily updates, in-depth investigations into pressing national issues, or entertaining trending stories, we value your readership.
It’s essential to acknowledge that news production incurs expenses, and we take pride in never placing our stories behind a prohibitive paywall.
Would you consider supporting us with a modest contribution on a monthly basis to help maintain our commitment to free, accessible news?
Support Now
x
Do this later
For Microfinance Banks (MFBs) and Primary Mortgage Banks (PMBs), NDIC increased the maximum coverage from N200 thousand to N2 million. It also extends comprehensive protection to 99.27 per cent and 99.34 per cent of depositors, respectively, further bolstering financial stability.
For Payment Service Banks (PSBs), the NDIC gave similar adjustments elevating the maximum coverage from N500,000 to N2 million, ensuring full coverage of 99.99percent of the total number of depositors and an increase in the value of deposits covered by deposit insurance to 43.10 per cent of the total value deposits from the current cover of 40.60 per cent for PSBs.
“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,” he said.
Emphasising the potential risk of bank runs associated with a significant volume of uninsured deposits, he highlighted research findings revealing that a substantial majority of depositors, ranging from 89.20 per cent to 99.99 per cent, benefited from full coverage under various bank categories.
Nonetheless, a considerable portion of the total deposit value remains unprotected.
He said that the implementation of the updated maximum deposit insurance coverage is backed by the corporation’s existing funding, including balances in different Deposit Insurance Funds (DIFs), projected annual premium collections and strengthened supervision to mitigate bank failures, efficient bank resolution frameworks, and other funding mechanisms outlined in the NDIC Act No. 33 of 2023.
He reiterated the NDIC’s steadfast dedication to safeguarding depositors and fostering financial system stability.
The NDIC chief emphasised that these adjustments demonstrate the NDIC’s commitment to adapting and evolving amid shifts in the financial industry landscape and ensuring a secure and robust banking environment for all stakeholders.
Share this:
Support PREMIUM TIMES’ journalism of integrity and credibility
At Premium Times, we firmly believe in the importance of high-quality journalism. Recognizing that not everyone can afford costly news subscriptions, we are dedicated to delivering meticulously researched, fact-checked news that remains freely accessible to all.
Whether you turn to Premium Times for daily updates, in-depth investigations into pressing national issues, or entertaining trending stories, we value your readership.
It’s essential to acknowledge that news production incurs expenses, and we take pride in never placing our stories behind a prohibitive paywall.
Would you consider supporting us with a modest contribution on a monthly basis to help maintain our commitment to free, accessible news?
Make Contribution
[embedded content]
TEXT AD: Call Willie – +2348098788999
Source: