October 27, (THEWILL) – The managing director and chief executive officer of the Nigeria Deposit Insurance Corporation (NDIC), Bello Hassan, has said that adequate insurance coverage has been made for depositors’ funds with Nigeria banks.
He also emphasised that the Corporation will not relent in its mandate to ensure that Nigeria’s financial system remains stable and robust .
Hassan made this disclosure in his keynote address at the opening ceremony of the 18th edition of the workshop for the Business Editors and Finance Correspondents Association of Nigeria (FICAN) on Tuesday at Gombe state.
He observed that concerns have been raised over the adequacy of the NDIC’s maximum coverage of depositors’ funds in various categories of Nigeria banks, noting that the concerns arose from lack of adequate understanding of the factors that informed the stipulated levels of coverage.
“Much of the concerns are predicated on the lack of adequate understanding of the principles, rationale and realities that informed the determination of our coverage limits.
“It is in that respect that we urge the media through this forum to make Nigerian depositors aware that the NDIC’s maximum coverage limits of N500,000.00 per depositor per commercial, merchant and, non-interest bank, primary mortgage bank and mobile money operator, as well as N200,000.00 per depositor per microfinance bank remain the most adequate and robust in the world.
“I need to reiterate that, as it is today, these limits are not only adequate, they are also consistent with the extant provisions and recommendations of the International Association of Deposit Insurers (IADI) in its Core Principle for Effective Deposit Insurance System on the determination of coverage limits.”
He noted that the limits were not static as the Corporation has successfully reviewed them in line with prevailing realities.
“The coverage limits are not designed to be static but subject to periodic reviews to ensure that they are consistent with the public policy objectives of the Deposit Insurance System.
“The Corporation successfully reviewed upward the coverage limits from N50,000 at inception in 1989 to N200,000 in 2006 and N500,000 in 2010,” he said.
Hassan added that ”In the same vein, the Corporation invites you to note that in 2016, 2017, 2018 and 2019, the total number of accounts in the deposit money banks stood at 83.0 million; 99.1million; 112.0 million and 128.4 million respectively,
“Out of these numbers, the N500,000 coverage limit fully covered 99.4%; 97.6%; 97.5% and 97.6% of accounts, respectively.
“What these figures entail is that only less than 3% of accounts/depositors are not fully covered by the prevailing coverage limits.
“The implication of this is that in the event of failure of a bank, above 97% of depositors would be fully covered by the Corporation.”
Hassan described the workshop’s theme, “Enduring Extreme Disruptions: Resilience & Reinvention for Banking System Stability & Deposit Insurance”, as apt as the global economy is recovering from the impact of the COVID-19 pandemic.
“As economies across the globe continue to grapple with the devastating impact of the COVID-19 pandemic, it has become expedient and highly desirable, for supervisors to come up with appropriate strategies that are required to build resilience into our financial system as we seek to provide the much-needed support to the Federal Government’s economic recovery agenda,” he said.
The workshop will end on Thursday, October 28.
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
