In another way to validate Nigeria’s rising unemployment rate and weak household income, the Nigeria Deposit Insurance Corporation (NDIC) has said 99.4 percent of all the bank accounts in Nigeria have less than the N500,000 Maximum Insured Limit (MIL) of the corporation.
Mr. Bello Hassan, the Managing Director and Chief Executive, NDIC, disclosed this in a workshop organised for Finance Correspondents and Business editors.
The MD and Chief Executive stated this against the concerns over the adequacy of the corporation’s maximum coverage limit of N500,000 per depositor, merchant and, non-interest bank, primary mortgage bank and mobile money operator, as well as N200,000 per depositor per microfinance bank.
Hassan said: “I need to reiterate that, as it is today, these limits are not only adequate, they are also consistent with the extant provisions and recommendations of the International Association of Deposit Insurers (IADI) in its Core Principle for Effective Deposit Insurance System on the determination of coverage limits.
“The IADI Core Principle No. 8 on coverage limits specifically requires that the thresholds should be limited, credible with the capacity to fully cover substantial majority of bank depositors while the rest remain exposed to ensure market discipline. Deposit insurance coverage should also be consistent with the deposit insurance system’s public policy objective.
“In addition, the coverage limits are not designed to be static but subject periodic reviews to ensure that they are consistent with the public policy objectives of the Deposit Insurance System. The Corporation successfully reviewed upward the coverage limits from N50,000 at inception in 1989 to N200,000 in 2006 and N500,000 in 2010.
“In the same vein, the Corporation invites you to note that in 2016, 2017, 2018 and 2019, the total number of accounts in the deposit money banks stood at 83.0 million; 99.1million; 112.0 million and 128.4 million respectively. Out of these numbers, the N500,000 coverage limit fully covered 99.4%; 97.6%; 97.5% and 97.6% of accounts, respectively. What these figures entail is that only less than 3% of accounts/depositors are not fully covered by the prevailing coverage limits.
“The implication of this is that in the event of failure of a bank, above 97% of depositors would be fully covered by the Corporation.
“From the foregoing statistics, it could be observed that the Corporation’s deposit insurance coverage limits are not only adequate but robust enough to engender confidence in our banking system.”