NDIC repositions to address challenges posed by the COVID-19 pandemic

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    Hassan

    The Nigeria Deposit Insurance Corporation, NDIC, repositions its operations to address the challenges posed by the COVID-19 Pandemic disruptions.

    The Managing Director/Chief Executive, Nigeria Deposit Insurance Corporation, NDIC, Bello Hassan stated this at the opening ceremony of the 18th Edition of the Workshop For Business Editors and Finance Correspondents Association of Nigeria, FICAN, with the theme: “Enduring Extreme Disruptions: Resilience & Reinvention for Banking System Stability & Deposit Insurance” on Tuesday 26th October, 2021 at Gombe International Hotel, Gombe, Gombe State.

    “I highlighted the key policy direction of the current management team of the NDIC under my leadership as we continue to reposition our operations in response to the challenges posed by the COVID-19 pandemic disruptions”, he said.

    “However, I will like to seize this opportunity to address the seemingly simple but knotty issue of the NDIC’s deposit insurance coverage limits that has always been misunderstood by stakeholders. The issue is so fundamental and needs to be thoroughly interrogated in the interest of all depositors to in order to sustain the Corporation’s rich legacies and the multiple ingenuous operational landmarks it was able to achieve in its over three decades of existence despite daunting challenges.  I was made to understand that the issue also provoked strong reactions during some of the presentations at the workshop held in Ibadan”, added the CE.

    “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 N500,000.00 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”, he noted.

    “Participants at the Ibadan workshop had 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”, he stated further.

    “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”, Hassan disclosed.

    “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 noted further.

    “In the same vein, the Corporation invites you to note that 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% of accounts, respectively. What these figures entail is that only less than 3% 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% of depositors would be fully covered by the Corporation”, the NDIC boss maintained.

    From the foregoing statistics, he said, “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”.

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