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NDIC increases insurance cover for primary mortgage banks by 150%

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By Kayode Tokede

Following the Minster of Finance, Kemi Adeosun’s approval, The Nigeria Deposit Insurance Corporation (NDIC) has increased its maximum deposit insurance coverage for primary mortgage banks (PMBs) by 150 per cent.

The commission explained that its maximum deposit insurance coverage (NDIC) has been reviewed from N200,000 to N500,000 per depositor for PMBs and the extension of differential premium assessment system (DPAS) to the PMBs.

The approval that was granted by the , Minister of Finance early this month,  emphasized the need for the Corporation to ensure that all the Deposit Money Banks, Primary Mortgage Banks and Micro fiancé Banks, strictly adhere to sound risk management practices and entrench compliance to the Central Bank of Nigeria (CBN) approved code of corporate governance standards.

A circular issued by Head, Communication & Public Affairs, Hadi Birchi, stated that, “As part of its statutory functions as a deposit insurer, Section 20 (2)  of the NDIC Act 2006, empowers the Corporation’s Board with periodically review the maximum deposit insurance coverage for licensed banks and other deposit taking finance institutions in accordance with changes in deposit structure, income levels and in line with global best practices.

“The MDIC review is carried out through studies and surveys and is aimed at ascertaining the adequacy or otherwise of the deposit insurance coverage level for insured institutions in Nigeria.

“The outcome of the most recent survey that was conducted in August, 2015 revealed the compelling need for the upward review of the current MDIC for the PMBs from N200,000 to N500,000 per depositor. The survey also revealed that the NDIC increase would cover 99per cent of depositors of the PMBs in Nigeria.

“The adoption of DPAS in assessing the annual premium payable by PMBs will promote better risk management in the banks in line with international best practises.  Presently, over 120 countries across the globe have adopted DPAS as an objective method of insurance premium pricing,” the circular explained.

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