Nigeria government increases insurance cover for depositors’ fund in banks

The Nigeria Deposit Insurance Corporation says it has been granted approval for an upward review of its Maximum Deposit Insurance Coverage from N200,000 to N500,000 per depositor for primary mortgage banks.

This was contained in a statement signed by the Head of NDIC’s Public Affairs Unit, Alhaji Hadi Birchi, in Lagos on Friday.

The statement stated that the regulator also got approval for the extension of differential premium assessment system to the PMBs.

According to the statement, the approval was granted by the Minister of Finance, Kemi Adeosun, in a letter dated August 4, 2016.

It added that there was the need for the corporation to ensure that all the DMBs, PMBs and MFBs strictly adhere to sound risk management practices.

The statement quoted NDIC as saying: “They should entrench compliance to the CBN approved code of corporate governance standards.

“As part of its statutory functions as a deposit insurer, Section 20 (2) of the NDIC Act 2006 empowers the corporation’s board to periodically review the maximum deposit insurance coverage for licensed banks.

“It also includes other deposit taking financial institutions in accordance with changes in deposit structure, income levels and in line with global best practices.”

It stated that its review was carried out through studies and surveys aimed at ascertaining the adequacy or otherwise of the deposit insurance coverage level for insured institutions in Nigeria.

It added: “The outcome of the most recent survey conducted in August, 2015 revealed the compelling need for the upward review of the current MDIC for the PMBs from N200,000 to N500,000 per depositor.

“The survey also revealed that the MDIC increase would cover 99 per cent of depositors of the PMBs in Nigeria.”

The statement stated that the adoption of DPAS in assessing the annual premium payable by PMBs would promote better risk management in the banks in line with international best practises.

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It also noted that over 120 countries across the globe had adopted the DPAS as an objective method of insurance premium pricing.