NDIC Chief Reveals Only 25% of Bank Deposits Insured

Bello Hassan, the Managing Director/Chief Executive Officer of the Nigeria Deposit Insurance Corporation (NDIC), disclosed that merely 25 percent of customers’ deposits are currently insured by the corporation.

He made this revelation during the 2024 Sensitisation Seminar for justices of the court of appeal in Lagos, themed ‘Building Strong Depositors Confidence in Banks and Other Financial Institutions through Adjudication’.

Explaining the rationale behind the recent increase in deposit insurance coverage for banks, Hassan emphasized the need to periodically review coverage to maintain depositor confidence. The adjustment was informed by factors such as average deposit size, inflation impact, GDP per capita, and exchange rate fluctuations.

Despite covering approximately 98 percent of depositors in terms of quantity, the insurance only extends to a quarter of the total deposit value. Hassan highlighted that the remaining 75 percent of deposits being uninsured helps mitigate the risk of moral hazard among banks by fostering market discipline.

He underscored the significant concentration of deposit values, with a small fraction of depositors controlling the majority of funds. This distribution, according to Hassan, offsets concerns regarding moral hazards.

Hassan emphasized the critical role of the judiciary in maintaining financial stability and called for enhanced collaboration between stakeholders. He suggested the formulation of practice directives within the Court of Appeal to expedite matters related to failed banks, facilitating swift debt recovery and culpability prosecution.

Presiding Justice of the Court of Appeal, Lagos Division, Jimi Bada, representing the President of the Court of Appeal, affirmed the judiciary’s readiness to handle issues arising from the bank recapitalisation exercise. He highlighted the expedited handling of banking and commercial matters through designated fast-track procedures.

Olumo Abdulazeez, representing the Administrator of the National Judicial Institute (NJI), reiterated the judiciary’s commitment to efficient case resolution, particularly in commercial disputes, emphasizing the elimination of delays.

Earlier in the month, the NDIC announced an increase in maximum deposit insurance coverage for various financial institutions licensed by the Central Bank of Nigeria. The adjustments included raising coverage limits for deposit money banks, microfinance banks, primary mortgage banks, payment service banks, and mobile money operators to enhance depositor protection.

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