Amaka Obiefuna

The Nigeria Deposit Insurance Corporation (NDIC) has announced the New Maximum Deposit Insurance Coverage Levels for all deposit-taking financial institutions in Nigeria.

Speaking today at a press conference in Lagos to give details on the new Maximum Deposit Insurance Coverage Levels regime, the Managing Director/Chief Executive Officer of NDIC, Mr. Bello Hassan, said the implementation of the new Deposit Insurance Coverage Levels regime takes immediate effect.

Mr. Hassan said the approval for the adjustment in the Deposit Insurance Coverage Levels was taken by NDIC’s Interim Management Committee (IMC), during its 18th meeting held on April 24th and 25th,2024.

With the new adjustment, the maximum deposit insurance coverage for Deposit Money Banks (DMBs) which has been increased from N500,000 to N5,000,000, would provide full coverage of 98.98% of the total depositors compared with the current cover of 89.20%.

In terms of the value of deposit covered, the revised coverage would increase the value of deposits covered by deposit insurance to 25.37% compared with the current cover of 6.31% of total value of deposits.

For Microfinance Banks (MFBs), the increase of the maximum deposit insurance coverage from N200,000 to N2,000,000, would provide full coverage of 99.27% of the total depositors compared with the current level of 98.76% and would increase the value of deposits covered by deposit insurance to 34.43% compared with 14.38% of total value of deposit, currently covered.

The increase of the maximum deposit insurance coverage for Primary Mortgage Banks (PMBs)from N500,000 to N2,000,000 would provide full coverage of 99.34% of the total depositors compared with the current 97.98% and would increase the value of deposits covered by deposit insurance to 21.04% compared with 10.77% of total value of deposit, currently covered.

For the Payment Service Banks (PSBs), the maximum deposit insurance coverage which has increased from N500,000 to N2,000,000 would provide full coverage of 99.99% of the total number of depositors and would increase the value of deposits covered by deposit insurance to 43.10% of the total value deposits from the current cover of 40.60%.

The maximum Pass-through deposit insurance coverage for Subscribers of Mobile Money Operators which has been increased from N500,000 to N5,000,000 per subscriber per MMO as the applicable coverage level for depositors of DMBs.

Mr Hassan said the revised deposit insurance coverage has balanced the NDIC’s goals of deposit protection and financial system stability with incentives for depositors to practice market discipline and prevent banks from unnecessary risk-taking and moral hazard.

He said consideration was given to ensure that the coverage was limited but adequate enough to protect a large number of depositors and credible enough to prevent the destabilizing effect of bank runs.

The NDIC boss explained that the adoption of the revised maximum deposit insurance coverage is supported by the Corporation’s current funding, represented by the balances in the various Deposit Insurance Funds (DIFs), expected annual premium collection, enhanced supervision that would reduce the likelihood of bank failures, effective bank resolution frameworks and other funding arrangements provided by the NDIC Act No. 33 of 2023.

 While reaffirming the NDIC’s unwavering commitment to protecting depositors and contributing to the stability of the financial system, Mr. Hassan said “These adjustments to the maximum deposit insurance coverage reflect our dedication to adapt and evolve in response to the changing landscape of the financial industry, and we remain steadfast in our pursuit of a secure and resilient banking environment for all.”