The Nigeria Deposit Insurance Corporation (NDIC) has revealed that 98.98 per cent of depositors in commercial banks and 99.27 per cent of those in microfinance banks in the country are now fully insured under its revised deposit insurance coverage.
This was disclosed yesterday at the 2024 NDIC Editors Forum held in Lagos, where the corporation emphasized its commitment to protecting depositors and strengthening financial stability in the country.
NDIC’s Director of Research, Policy, and International Relations, Dr Kabir Katata, explained that the recent increase in deposit insurance coverage from N500,000 to N5 million for commercial banks, and from N200,000 to N2 million for microfinance banks, is aimed at aligning with global standards and deposit structures.
“At N5 million, we have covered about 99 per cent of depositors in commercial banks based on 2022 data, and for microfinance banks, at N2 million, we’ve insured 99.27 per cent of depositors using June 2023 data,” Katata said.
He added that the coverage also protects 26 per cent of total deposits in commercial banks and 34.43 per cent of deposits in microfinance banks, a significant improvement over previous figures.
The NDIC’s Director of Research, Policy, said that the insurance covers were reviewed based on available data and careful consideration of factors such as available funds, deposit structures, inflation, and the overall state of the economy.
He noted that increasing the cover above the current cap may cast a strain on the NDIC’s capacity to pay in the eventuality of a failed bank. “Increasing coverage arbitrarily could compromise sustainability. We must ensure our insurance funds can handle stress scenarios like multiple bank failures,” Katata emphasized.
NDIC’s Managing Director, Bello Hassan, who was represented by the Executive Director of Operations, Mustafa Ibrahim, highlighted the corporation’s efforts in managing the liquidation of Heritage Bank following its license revocation by the Central Bank of Nigeria in June this year.
Ibrahim stated that the NDIC deployed innovative methods, including the use of Bank Verification Numbers (BVNs), to ensure insured depositors received payments promptly.
“Within four days, we began reimbursing depositors up to N5 million without requiring them to fill forms or visit NDIC offices physically. This innovation aligns with our commitment to ensuring timely payment as outlined in international standards,” Ibrahim explained.
He, however, urged Heritage Bank depositors facing reimbursement delays to comply with Know Your Customer (KYC) regulations to facilitate payments. “Challenges such as mismatched names, absent BVNs, and account restrictions have delayed some reimbursements. Strict adherence to KYC rules will ease the process and ensure all depositors are reimbursed promptly,” he said.
Beyond insured deposits, Ibrahim assured that efforts are ongoing to pay uninsured balances through liquidation dividends from asset recoveries of failed banks.
He reiterated the corporation’s unwavering commitment over the past three decades to safeguarding depositors and maintaining confidence and stability in Nigeria’s financial system.
He also commended the media for their vital role in educating the public about NDIC’s mandate and called for strengthened collaboration to further enhance public awareness and understanding of its functions.
The Sun Nigeria
