NDIC Directs Insured Institutions To Pay premium based on assessed risks

The Nigeria Deposit Insurance Corporation (NDIC),has directed insured financial institutions in the country to pay premium based on assessed risks.

The Managing Director of the corporation, Mr Bello Hassan, who announced this at the 2021 Financial Correspondents Association of Nigeria (FICAN) workshop in Ibadan,said that the corporation was currently reviewing the premium approach to ensure that the probability of risks crystallising in any NDIC insured financial institution would be the major determining factor for the pricing methodology.

He also said the focus is  to scale up the deposit insurance framework; provide timely support to insured institutions as and when required.

He added that  the strategy would also ensure faster and orderly resolutions of liquidated insured institutions and continue to assist the CBN in promoting the stability of the banking system.

“In the area of deposit insurance, as a key mandate of the corporation, we have evolved a strategy which accentuates our existing framework.

“The initiative strives to ensure that insurance cover is adequate.

“We have commenced the review of our approach to the determination of premium by banks to make it more risk-based, such that, the probability of risk crystallising, becomes a major factor in the pricing methodology of our premium going forward,’’ Bello explained.

He said NDIC had identified the need to reconsider its framework, to provide realistic terms and conditions that would enable qualifying insured financial institutions to promptly access technical and or financial support in line with NDIC’s Act.

Bello listed some obstacles bedevilling the efficient and timely resolutions of liquidated institutions to include slow recovery and realisation of assets, as well as litigation by erstwhile shareholders and creditors of closed banks.

The managing director said the obstacles would only be addressed through effective collaborations.

He expressed optimism that the workshop would help the media, the civil society groups, along the insured financial institutions to better understand the policies and programmes of the corporation.

In a lecture, Mr Olatayo Babatolu, the Director, Banking Examination Department of the NDIC, said the banking industry was the most disrupted today following developing trends.

He said that one of the ways to ensure resilience in the industry was to have a Deposit Insurance Scheme (DIS).

Babatolu said that DIS was a financial guarantee to protect depositors in the event of bank failure.

The director said that the corporation would continue to leverage technology to ensure speed in payment of insured deposits and consumer complaints resolution.