‘Over 97% of eligible depositors fully covered by NDIC’

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Over 97 per cent of eligible bank deposits are fully covered by the Nigeria Deposit Insurance Corporation (NDIC), the Managing Director of the organisation, Bello Hassan, disclosed at the weekend.

Hassan, who spoke at an editors’ forum in Lagos, said the Corporation has covered 99.4 per cent, 97.6 per cent, 97.5 per cent and 97.6 per cent of accounts of N500, 000 coverage limit in 2016, 2017, 2018 and 2019 respectively.

The coverage, he said, was enough to boost confidence in the banking sector.

“The Corporation’s deposit insurance coverage limits are not only adequate but robust enough to engender confidence in our banking system. For instance, in 2016, 2017, 2018 and 2019, the total number of accounts in the deposit money banks stood at N83 million, N99.1 million, N112 million and N128.4 million respectively,” he noted.

Hassan highlighted several ongoing reviews on NDIC’s processes and approaches to further de-risk the banking and protect the Corporation.

He said part of the review would ensure that “the probability of the risk crystallising becomes a major factor in the pricing methodology of our premium going forward.

He stated, “On timely support to insured institutions, we have identified the need to reconsider our criteria for qualification of financial institutions to provide realistic terms and conditions to facilitate prompt access to technical and/or financial support in line with Section (2)(1)(b) of the NDIC Act whilst also protecting the Corporation from possible downside risk.”

He noted the various settlements made by the Corporation, saying it has accomplished “the payment of guaranteed sums and liquidation dividends speaks volumes of its commitment to the discharge of its unique mandate. NDIC had paid a cumulative sum of ₦N8.268 billion to 443,946 insured depositors and ₦100.08 billion to uninsured depositors of deposit money banks (DMBs) in-liquidation as of September 30, 2021, while N3.413 billion was paid to 90,945 insured depositors of microfinance banks and ₦1.218 million to uninsured depositors.

“In the same vein, the cumulative insured amount paid to 1,553 depositors of closed primary mortgage banks as of September 30, 2021, stood at N110.15 million while ₦N7.965 million was paid as uninsured deposits.

“Most importantly, the payment of N1.274 billion to 991 creditors and ₦4.886 billion to 965 shareholders of banks in-liquidation as of September 30, 2021, underscored the Corporation’s success story in bank liquidation. What this implies is that the Corporation had realised enough assets to pay all the insured and uninsured depositors of the banks that present themselves for payment. Currently, 19 out of the 49 DMBs in-liquidation fall into this category.”

The Director, Insurance and Surveillance Department, Galadima Gana, said Nigerian banks were stable. He listed symptoms of a failing bank as illiquidity, increased petitions by aggrieved customers who cannot withdraw, distress borrowing at the money/interbank market and frequent requests for cash assistance from the regulatory authorities.

Others listed are patronage of the Central Bank of Nigeria (CBN)’s discount window, low earnings/huge operational losses, inability to meet the regulatory thresholds and high staff turnover.

According to Gana, the total deposits of banks in liquidation from 1994 till date is N228.42 billion. The amount cut across DMBs, microfinance and primary mortgage banks. The amount, he said, is owned by 3.94 million depositors.

The insured paid amount, according to statistics presented, was N11.79 billion while the uninsured paid deposit was N107.25 billion, bringing the cumulative amount paid by the Corporation to 119.04 billion.

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