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NDIC Boosts Deposit Insurance Coverage For Bank Depositors

The Nigeria Deposit Insurance Corporation (NDIC) has announced a substantial increase in the Maximum Deposit Insurance Coverage for banks operating in the country. 

NDIC’s Managing Director, Bello Hassan disclosed this at a media briefing in Abuja .

 PLATFORM TIMES reports that the  MDIC for Deposit Money Banks has been raised from N500,000 to N5m, for Microfinance Banks from N200,000 to N2m, for Primary Mortgage Banks from N500,000 to N2m, and for Mobile Money Operators subscribers’ pass-through from N500,000 to N5m per subscriber.

Similarly, Primary Mortgage Banks (PMBs) will experience a jump from N500,000 to N2 million, and Mobile Money Operators (MMOs) subscribers’ pass-through coverage will escalate from N500,000 to N5 million per subscriber.

Hassan underscored the pivotal objective of these updates, emphasizing their role in bolstering depositor safety, promoting financial inclusivity, and fortifying the resilience of the financial sector. 

He highlighted that the adjustments take immediate effect, ensuring a swift implementation of the revised coverage levels across all licensed deposit-taking financial institutions.

The impact of these revisions is substantial: for DMBs, the coverage extension from N500,000 to N5 million will now encompass 98.98% of total depositors, up from the previous 89.20%. Similarly, MFBs, PMBs, and PSBs will witness significant expansions in both coverage and value of deposits insured, enhancing depositor confidence and mitigating the risk of bank runs.

These adjustments come on the heels of a comprehensive evaluation conducted by NDIC in 2023, aligning with international best practices outlined by the International Association of Deposit Insurers.

 The study reaffirmed the efficacy of the revised coverage levels, striking a delicate balance between protecting depositors and maintaining market discipline.

Hassan further assured depositors of NDIC’s unwavering commitment to safeguarding the stability of the financial system, citing robust funding mechanisms and enhanced supervisory frameworks as pillars of support. 

He reiterated NDIC’s dedication to adaptability and resilience, pledging to uphold a secure banking environment conducive to sustainable economic growth.

Hassan emphasised that the update aims to bolster depositor safety, public trust, the inclusivity of financial services, and the overall stability of the financial sector.

He stated, “The increase in the maximum deposit insurance coverage levels for all licenced deposit-taking financial institutions with immediate effect.”

NDIC stated that the increase of the maximum deposit insurance coverage of DMBs from N500,000 to N5m 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 deposits 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.

The increase of the maximum deposit insurance coverage of MFBs from N200,000 to N2m would provide full coverage of 99.27 per cent of the total depositors compared with the current level of 98.76 per cent and would increase the value of deposits covered by deposit insurance to 34.43 per cent compared with 14.38 per cent of the total value of the deposit, currently covered.

The increase of the maximum deposit insurance coverage of PMBs from N500,000 to N2m would provide full coverage of 99.34 per cent of the total depositors compared with the current 97.98 per cent and would increase the value of deposits covered by deposit insurance to 21.04 per cent compared with 10.77 per cent of the total value of the deposit, currently covered.

The increase of the maximum deposit insurance coverage of PSBs from N500,000 to N2m would provide full coverage of 99.99 per cent of the total number of depositors and would increase 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.

The increase of the maximum pass-through deposit insurance for Subscribers of Mobile Money Operators coverage from N500,000 to N5,000,000 per subscriber per MMO is the applicable coverage level for depositors of DMBS

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