According to the Managing Director and Chief Executive of
the NDIC, Mr Bello Hassan, 97.6 per cent of accounts are fully covered under
the N500,000 current coverage limit of the corporation, even as he added that
the limit is subject to periodic reviews.
He stressed that there is a need for an amendment to the
NDIC act, to give the agency more powers to recover and liquate loans and
assets.
He made this known at the opening ceremony of the 18th
edition of the workshop for business editors and Finance Correspondents
Association of Nigeria (FICAN), themed, “Enduring Extreme Disruptions:
Resilience & Reinvention for Banking System Stability & Deposit
Insurance,” in Gombe yesterday.
Hassan said: “In 2016, 2017, 2018 and 2019, the total number
of accounts in the deposit money banks stood at 83.0 million; 99.1million;
112.0 million and 128.4 million respectively. “Out of these numbers, the
N500,000 coverage limit fully covered 99.4; 97.6; 97.5 and 97.6 per cents of
accounts, respectively.
“What these figures entail is that only less than three per
cent of accounts/depositors are not fully covered by the prevailing coverage
limits. The implication of this is that in the event of failure of a bank,
above 97 per cent of depositors would be fully covered by the corporation. From
the foregoing statistics, it could be observed that the corporation’s deposit
insurance coverage limits are not only adequate but robust enough to engender
confidence in our banking system.
“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.”
The NDIC boss said the need to further educate depositors on
the issue of coverage is paramount as the coverage limits has always been
misunderstood by stakeholders.
“Much of the concerns are predicated on the lack of adequate
understanding of the principles, rationale and realities that informed the
determination of our coverage limits. It is in that respect that we urge the
media through this forum to make Nigerian depositors aware that the NDIC’s
maximum coverage limits of N500,000 per depositor per commercial, merchant and,
non-interest bank, primary mortgage bank and mobile money operator, as well as
N200,000 per depositor per microfinance bank remain the most adequate and
robust in the world.
“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.” He stated
Responding to questions on the sidelines of the event, he
said: “There are a lot of areas that I think the NDIC act needs to be amended.
NDIC we are liquidators and what happens is that at the point of liquidation,
we try to recover the assets especially the loans and advances that were
granted by those banks that are in liquidation.”
“One of the challenges that we are facing is slow recovery
and if the act is to be amended, I think it is important that the corporation
is efficiently empowered to be able to recover those assets as expeditiously as
possible so they can pay the depositors.”
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