The issue of Deposit Insurance coverage limits pegged by Nigeria Deposit Insurance Commission (NDIC) has always been misunderstood by stakeholders in the country.
The Managing Director and Chief Executive of NDIC, Bello Hassan, stated this in Gombe State at the just concluded seminar for financial journalists, with the theme: “Enduring Extreme Disruptions: Resilience & Reinvention for Banking System Stability & Deposit Insurance”
The NDIC boss noted that much of the concerns are based on the lack of adequate understanding of the principles, rationale and realities that informed the determination of coverage limits.
He said the issue is so fundamental and needs to be thoroughly addressed in the interest of all depositors to sustain the Corporation’s rich legacies and its multiple ingenuous operational landmark achievements for over three decades despite adverse headwinds.
In his words: “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.”
“Many been very critical that the coverage limits are not only small but required an urgent upward review in order to engender stronger public confidence in the banking system.
“Nonetheless, 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.”
“The IADI Core Principle No. 8 on coverage limits specifically requires that the thresholds should be limited, credible with the capacity to fully cover substantial majority of bank depositors while the rest remain exposed to ensure market discipline. Deposit insurance coverage should also be consistent with the deposit insurance system’s public policy objective. ”
In addition, the coverage limits are not designed to be static but subject 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 reiterated the commission’s resolve to continually update stakeholders on latest international best practices and developments in the sector even as economies across the globe continue to grapple with the devastating impact of the COVID-19 Pandemic.
MD/CE NDIC, Bello Hassan.
“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.