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The Nigeria Deposit Insurance Corporation (NDIC) has announced a significant increase in the maximum deposit insurance coverage for depositors of all licenced deposit-taking financial institutions.
This move, effective immediately, aims to bolster depositors’ protection and enhance confidence in the financial system. Dr. Bello Hassan, the Managing Director of NDIC, revealed this decision during a media briefing held in Abuja.
Hassan reiterated NDIC’s commitment to safeguarding depositors’ funds and ensuring the stability of the financial sector. According to him, the adjustment to the maximum deposit insurance coverage reflects NDIC’s responsiveness to the evolving landscape of the financial industry.
Under the revised coverage, Deposit Money Banks (DMBs) will witness a tenfold increase, with the maximum coverage rising from N500,000 to N5,000,000. Similarly, Microfinance Banks (MFBs) will see their coverage rise from N200,000 to N2,000,000, while Primary Mortgage Banks (PMBs) will experience an increase from N500,000 to N2,000,000.
Additionally, Payment Service Banks (PSBs) will now offer a maximum coverage of N2,000,000, up from N500,000. Mobile Money Operators (MMOs) subscribers will benefit from a significant increase in the maximum pass-through deposit insurance coverage, from N500,000 to N5,000,000 per subscriber per MMO.
Hassan stated that the revised coverage aims to provide adequate protection to a vast majority of depositors while also incentivising market discipline. NDIC conducted a study in 2023 to assess the adequacy of the maximum deposit insurance coverage, aligning with international best practices.
High uninsured deposit levels pose risks to bank runs, according to international assessments. To mitigate these risks, he stressed that NDIC’s decision balances deposit protection with incentives for market discipline, aiming to prevent unnecessary risk-taking and moral hazards.
Hassan emphasised that the adoption of the revised coverage is supported by the corporation’s current funding, effective supervision, bank resolution frameworks, and other funding arrangements provided by the NDIC Act.
