NDIC raises insurance cover for PMBs to N500, 000 from N200, 000

The Nigeria Deposit Insurance Corporation (NDIC) has increased the deposit insurance coverage for Primary Mortgage Banks (PMBs) by 150 per cent to N500, 000.

NDIC Managing Director, Umaru Ibrahim who disclosed this in Lagos, said the corporation will continue to review its deposit insurance coverage for depositors of PMBs in the event of failure.

“The current coverage level represents an increase of 150 per cent over the earlier level of N200, 000. Thus, the gap of the coverage between the commercial banks and PMBs is now bridged with the envisaged increase in patronage of PMBs,” he said.

Speaking at the 2016 sensitisation workshop for PMBs’ operators, he said the corporation’s records showed that 15 out of 42 PMBs are yet to meet their premium payment obligations to the corporation. He urged the affected operators to promptly pay their premium to the corporation in line with regulatory guidelines.

He said the corporation has the capacity to sustain its efforts in ensuring that insured institutions are put on the part of sustainable growth and development, adding that it is an exercise that would depend largely of premium contribution.

The corporation, he said, has also deployed the Differential Premium Assessment System (DPAS) in pricing the deposit premium of PMBs.

He said the DPAS centres on strong Enterprise Risk Management Framework (ERMF) and classifies banks into various risk buckets and apply different premium rates depending on the level of risk involved.

He said the DPAS will mitigate insurable risks for PMBs as well as encourage effective enterprise risk management.

According to him, the ERMF would include sound strategic planning and transformative business model and addresses the issue of moral hazard which guarantees caution and avoidance of excessive risk taking in running a PMB.

Ibrahim said: “To the operators in particular, the risk-based premium system allows the institution to pay much less premium than would have been the case, had the alternative, flat rate system had been adopted.

The NDIC boss said the corporation is the sole agency empowered to guarantee depositors’ funds in the deposit-taking financial institutions.