The change was accepted during the 18th meeting of the NDIC’s Interim Management Committee (IMC) on April 24th and 25th.
Starting immediately, all licensed financial institutions that accept deposits have had their maximum deposit insurance coverage levels raised by the Nigeria Deposit Insurance Corporation (NDIC).
This was revealed at a press conference on Thursday by Bello Hassan, the managing director of the NDIC.
He mentioned that the changes were accepted during the 18th meeting of the NDIC’s Interim Management Committee (IMC) on April 24th and 25th.
Full protection was extended to 98.98% of depositors, up from 89.20% before, when the NDIC raised the coverage for commercial banks from N500,000 to N5,000,000.
By increasing the value of deposits protected, this change boosts confidence among depositors and reduces the likelihood of bank runs.
The present coverage rate for deposit money banks (DMBs) is 89.20%; however, if the maximum deposit insurance coverage were raised from N500,000 to N5,000,000, 98.98% of depositors would be fully covered.
The value of deposits covered by deposit insurance would grow from 6.31 percent to 25.37 percent under the enhanced coverage, he added, adding that this represents a significant improvement.
The National Housing Development Institution (NDIC) upgraded the maximum coverage for Microfinance Banks (MFBs) and Primary Mortgage Banks (PMBs) from N200,000 to N2,000,000. Further strengthening financial stability, it offers comprehensive protection to 99.27% and 99.34% of depositors, respectively.
The National Deposit Insurance Corporation (NDIC) made comparable changes for Payment Service Banks (PSBs), increasing the maximum coverage from N500,000 to N2 million. This will cover all depositors, which amounts to 99.99 percent, and the value of deposits insured will rise from 40.60 percent to 43.10 percent.
The speaker announced an increase to the maximum pass-through deposit insurance coverage for DMBs, going from N500,000 to N5,000,000 per subscriber per MMO.
He brought attention to the fact that most depositors—anywhere from 89.20% to 99.99%—were covered in full by different types of banks, highlighting the possibility of bank runs linked with large amounts of uninsured deposits.
However, a significant amount of the overall deposit value is still not secured.
He stated that the corporation’s current funding, including various Deposit Insurance Funds (DIFs), projected annual premium collections, enhanced supervision to reduce bank failures, efficient frameworks for bank resolution, and other funding mechanisms specified in the NDIC Act No. 33 of 2023, will support the implementation of the updated maximum deposit insurance coverage.
Protecting depositors and promoting financial system stability are the NDIC’s unwavering commitments, he emphasized.
The chief executive officer of the National Deposit Insurance Corporation (NDIC) stressed that the changes show the agency’s dedication to changing and adapting with the times and maintaining a stable banking environment for everyone involved.