• Tuesday, June 25, 2024
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NDIC increases deposit insurance coverage of PMBs to N500,000

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Nigeria Deposit Insurance Corporation (NDIC) increased the coverage level for depositors of Primary Mortgage Banks (PMBs) from N200,000 to N500,000 in 2015.

The NDIC is the sole agency empowered to guarantee depositors’ funds in deposit-taking financial institutions in Nigeria, including PMBs. The NDIC, as an insurer, reimburses depositors of all PMBs up to a maximum limit of N500,000 per depositor per PMB in the event of failure of such PMB. The new coverage level represents an increase of 150 percent over the earlier coverage level of N200,000.

The NDIC had in 2014 developed and deployed a framework for Financial Assistance for PMBs so as to promptly intervene and assist them to overcome temporary liquidity problems.

A PMB is a company licensed to carry out mortgage financing, real estate construction financing, acceptance of savings and time/term deposits and acceptance of mortgage-focused demand deposits in Nigeria. Other functions carried out by a PMB are drawing from mortgage funds (e.g. National Housing Fund Facility) for on lending and provision of financial advisory services for mortgage customers.

According to Umaru Ibrahim, managing director/CEO, NDIC, PMB is therefore expected to source for savings from individuals, organisations, companies and investment outfits and utilise such deposits by providing construction finance for developing houses and mortgages to people who want to buy such.

The Corporation noted in its 2015 annual report that the current coverage levels of N500,000 per depositor per deposit money bank (DMB) and N200,000 per depositor per microfinance bank (MFB) were found to be adequate and so remained unchanged.

However, the NDIC reduced the premium paid by banks by N9.09 billion in 2015 following the reduction of the premium base rate from 40 basis point to 35 for each DMB/NIB under the Differential Premium Assessment System (DPAS).

During the year under review, the Corporation extended deposit insurance coverage to subscribers of mobile money operators (MMOs) via the concept of pass-through deposit insurance up to a maximum ofN500,000.