NDIC increases banks’ deposit insurance coverage from N500k to N5m

The Nigeria Deposit Insurance Corporation (NDIC) has increased deposit insurance coverage for all licensed deposit-taking financial institutions.

Bello Hassan, NDIC managing director and chief executive officer (CEO), announced on Thursday at a press briefing in Abuja.

Deposit insurance protects depositors’ funds in the event of a bank failure.

This coverage ensures that depositors are reimbursed to a certain limit for their deposits in the failed bank.

Hassan said the increment applies to deposit money banks (DMBs), microfinance banks (MFBs), primary mortgage banks (PMBs), payment service banks (PSBs), and mobile money operators (MMOs).

He said the deposit insurance coverage for DMBs was increased from N500,000 to N5 million.

According to the CEO, the revised coverage would increase the value of DMB deposits covered by the insurance from 6.31 percent to 25.37 percent of the total value of depositors’ funds.

“By increasing deposit insurance coverage, we are ensuring that depositors are better protected in the unlikely event of a bank failure,” he said.

He said the increase provides coverage for 98.98 percent of DMB depositors — compared to the previous 89.20 percent.

“MFBs coverage has risen from N200,000 to N2 million, offering full coverage for 99.27 percent of depositors (up from 98.76 percent) and significantly increasing the value of covered deposits (from 14.38 percent to 34.43 percent of total deposits),” Hassan said.

“For PMBs, the maximum coverage has been raised from N500,000 to N2 million, ensuring full coverage for 99.34 percent of depositors (up from 97.98 percent) and boosting the value of covered deposits (from 10.77 percent to 21.04 percent of total deposits).”

Also, Hassan said PSB coverage has been increased from N500,000 to N2,000,000, providing 99.99 percent protection for depositors and raising the value of covered deposits to 43.10 percent of the total (from 40.60 percent).

He said the maximum pass-through deposit insurance coverage for MMOs has been raised to N5 million per subscriber per MMO, aligning it with the coverage level for DMBs.

The CEO added that the revised maximum deposit insurance coverage is supported by a combination of existing funds, expected future funds, improved supervision, effective bank resolution frameworks, and additional funding arrangements provided by the NDIC Act.

Hassan said NDIC is committed to ensuring the stability of the financial system.