The Nigeria Deposit Insurance Corporation (NDIC) on Friday reviewed its maximum deposit insurance coverage (MDIC) for primary mortgage banks (PMBs) from N200,000 to N500,000 per depositor.
The NDIC said the Minister of Finance, Kemi Adeosun, had also approved the extension of differential premium assessment system (DPAS) to the PMBs.
The approval, the corporation, explained, was granted to emphasize the need to ensure that all deposit money banks (DMBs), PMBs and mortgage finance banks (MFBs) adhered strictly to sound risk management practices and entrench compliance to the Central bank of Nigeria (CBN) approved code of corporate governance standards.
“As part of its statutory functions as a deposit insurer, Section 20 (2) of the NDIC Act 2006, empowers the Corporation’s Board to periodically review the maximum deposit insurance coverage for licensed banks and other deposit taking financial institutions in accordance with changes in deposit structure, income levels and in line with global best practices,” the NDIc said.
The corporation explained that the MDIC review was carried out through studies and surveys aimed at ascertaining the adequacy or otherwise of the deposit insurance coverage level for insured institutions in the country.
The outcome of the most recent survey conducted in August, 2015, the NDIC said, revealed the compelling need for the upward review of the current MDIC for the PMBs per depositor.
Also, the NDIC said the survey also revealed that the MDIC increase would cover 99 per cent of depositors of the PMBs in the country.
It said that the adoption of DPAS in assessing the annual premium payable by PMBs would promote better risk management in the banks in line with international best practices.
At the moment, over 120 countries across the world have adopted DPAS as an objective method of insurance premium pricing.
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