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The Nigeria Deposit Insurance Corporation (NDIC) has taken a significant step towards bolstering depositor protection by increasing the Maximum Deposit Insurance coverage of Deposit Money Banks (DMBs) from N500,000 to N5 million.
This announcement was made by Mr. Bello Hassan, the Managing Director of NDIC, during a press conference held in Abuja earlier today.
Deposit Insurance coverage ensures that customers’ deposits in banks will be promptly paid out to them in the event of a bank failure.
For customers with deposits exceeding N5 million, they can still recover their funds beyond the insured amount through Liquidation Dividend, following the sale of a failed bank’s assets or recovery of loans from debtors.
Mr. Hassan outlined that the coverage extension also applies to other financial institutions: Primary Mortgage Banks, Payment Service Banks, and Subscribers of Mobile Money Operators, with coverage levels raised to N5 million.
The decision to heighten coverage levels was reached during the 18th meeting of the NDIC’s Interim Management Committee, held last week, following a comprehensive study conducted in 2023 to assess the adequacy of the Maximum Deposit Insurance Coverage nationwide.
Mr. Hassan emphasized that the NDIC’s Deposit Fund, which exceeds N2 trillion, would facilitate the implementation of this policy, aimed at enhancing depositor confidence and the stability of Nigeria’s banking sector.
He urged members of the public to exercise caution and avoid unlicensed deposit-taking institutions, as their deposits are not insured and could be at risk. He advised individuals to verify the status of deposit-taking organizations through the NDIC and Central Bank of Nigeria websites to avoid falling victim to fraudulent schemes.
The historical journey of deposit insurance coverage in Nigeria reflects the evolution of depositor protection measures. From its inception in 1989 with a coverage limit of N50,000 for DMB depositors, the coverage has undergone several adjustments over the years, culminating in the latest enhancement to N5 million for various categories of depositors.
This proactive measure by the NDIC underscores its commitment to safeguarding depositors’ interests, fostering financial inclusion, and ensuring the stability of the financial system.
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