Alhaji-Umaru-Ibrahim-of-NDIC
Alhaji-Umaru-Ibrahim-of-NDIC

The Managing Director of the Nigeria Deposit Insurance Corporation (NDIC), Alhaji Umaru Ibrahim, has said the corporation has granted a cumulative sum of N192.6 billion in deposit insurance premium rebate to deposit money banks (DMBs) between 2012 and 2014.

Alhaji-Umaru-Ibrahim-of-NDIC
Alhaji-Umaru-Ibrahim-of-NDIC

He also said the corporation had further reduced the deposit insurance premium rate to all DMBs in the country as part of efforts toward contributing to financial system stability and promoting public confidence in the banking industry.

He said the premium reduction policy had been initiated to consolidate on the gains achieved by the corporation?s migration from Flat Rate Premium System (FRPS) to Differential Premium Assessment System (DPAS).

The DPAS approach takes into consideration the risk each bank poses to the system and encourages banks to adopt sound risk management practices.

According to him, by 2012, 2013 and 2014, the NDIC had granted a total rebate of N53 billion, N63.6 billion and N75.98 billion respectively to banks.

Ibrahim further noted that the NDIC Board had granted additional relief to the DMBs at its last meeting in September 2014, reducing the insurance premium basis rate from the existing 40 to 35 basis points.

In a statement by Head, Communications and Public Affairs, NDIC, Alhaji Hadi Birchi, the NDIC boss said the new premium rate had already taken effect this month.

He stressed that the insurance premium rebates were part of the NDIC major contributions toward improving the intermediation role and other banking related activities of the DMBs.

He said the Principle 11 of the Core Principles for effective Deposit Insurance System requires Deposit Insurance Agencies (DIAs) to set aside adequate funds to ensure depositors? prompt reimbursement in the event of any bank failure.

He disclosed that the corporation would from 2015 set new coverage levels for the DMBs in view of their relatively large volumes of deposits.

The NDIC had initiated the insurance premium rebate since the commencement of DPAS in 2008 but the import began in 2010 sequel to the board?s decision to contribute to the Financial Stability Fund that was spearheaded by the Central Bank of Nigeria (CBN).

The corporation had supported the fund through the reduction of premium base rate from 50 to 40 basis points to reduce the premium burden on the DMBs.

It currently administers three types of funds including Deposit Insurance Fund (DIF) for DMBs, Special Insured Institutions Fund (SIIF) for MFBs and PMBs and Non-Interest Deposit Insurance Fund (NIDIF) for Non-Interest Banks.

Premium collection from the insured banks contributes substantially to the funds available to the NDIC to discharge its mandate and covering 97 per cent of the bank depositors-an indication of adequate coverage and appropriate pricing.

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