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NDIC to increase mortgage bank customers’ deposit cover

By BusinessNews Staff on October 1, 2014

The Nigeria Deposit Insurance Corporation on Monday unveiled plans to increase the deposit insurance coverage for customers of Primary Mortgage Banks operating in the country.

The Managing Director/Chief Executive, NDIC, Alhaji Umaru Ibrahim, dropped the hint in Abuja in a keynote address at a sensitisation workshop for operators of the PMBs.

The workshop, with theme: ‘Developing and implementing sustainable effective risk management in PMBs in Nigeria’, was organised by the NDIC to promote safe and sound banking practices.

The NDIC as an insurer, reimburses depositors of all PMBs up to a maximum limit of N200,000 per depositor in the event of failure of a mortgage institution.

The N200,000 per depositor, which took effect in 2010, represents an increase of 100 per cent over the earlier N100,000, when the insurance package was first extended to the sector in 2006.

But Umar said since the PMBs seemed to carry more risks and pay more insurance premium than microfinance banks, there was a need to increase the corporation’s coverage from the current N200,000 per depositor.

He, however, failed to provide the amount for the new deposit insurance cover being planned by the corporation.

Umar said, “Going forward, we are going to review the insurance coverage for the PMBs which is currently N200,000, and we are thinking why not segregate that sector from what obtains in microfinance banks, given the huge risks that you carry and the quantum of premium that you pay

“We are also considering reviewing the flat rate and introducing the risk-based premium, which is the case in the banking industry with deposit money banks. That way, you will be able to promote safer and best practices.”

[Punch]

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