The Nigeria Deposit Insurance Corporation (NDIC) on Sunday said it had granted approval for an upward review of its maximum deposit insurance coverage for the Primary Mortgage Banks from N200,000 to N500,000 per depositor.
The corporation, in a statement issued in Abuja, also stated that approval had also been given to extend the differential premium assessment system to the PMBs.
The differential premium assessment system is an approach that takes into consideration the risk each lender poses to the system and encourages such a lender to adopt sound risk management practices.
The statement from the corporation said the approvals were granted by the Minister of Finance, Mrs. Kemi Adeosun, in a letter dated August 4, 2016.
The statement said the minister in the letter emphasised the need for the corporation to ensure that all the Deposit Money Banks, PMBs and microfinance banks strictly adhered to sound risk management practices and entrenched compliance with the CBN-approved code of corporate governance standards.
As part of its statutory functions as a deposit insurer, the statement said Section 20 subsection 2 of the NDIC Act 2006 empowers the corporation’s board to periodically review the maximum deposit insurance coverage for licensed banks and other deposit -taking financial institutions.
This, according to the section, must be in accordance with changes in deposit structure, income levels and in line with global best practices.
The statement read in part, “The mandatory deposit insurance coverage review is carried out through studies and surveys and is aimed at ascertaining the adequacy or otherwise of the deposit insurance coverage level for insured institutions in Nigeria.
“The outcome of the most recent survey that was conducted in August, 2015 revealed the compelling need for the upward review of the current mandatory deposit insurance coverage for the PMBs from N200,000 to N500,000 per depositor.
“The survey also revealed that the insurance coverage increase would cover 99 per cent of PMBs depositors in Nigeria.”
The statement states that the adoption of DPAS in assessing the annual premium payable by PMBs will promote better risk management in the banks in line with international best practices.
