N5m insurance coverage will enhance depositors’ safety nets — Senate

The Chairman, Senate Committee on Banking, Insurance and other Financial Institution, Senator Mukhail Abiru (APC, Lagos East) at the weekend stated that the recent increase in deposit insurance coverage by the Nigeria Deposit Insurance Corporation (NDIC) will enhance safety nets for depositors. The NDIC had earlier in the year increased the deposit insurance coverage for […]

The Chairman, Senate Committee on Banking, Insurance and other Financial Institution, Senator Mukhail Abiru (APC, Lagos East) at the weekend stated that the recent increase in deposit insurance coverage by the Nigeria Deposit Insurance Corporation (NDIC) will enhance safety nets for depositors.

The NDIC had earlier in the year increased the deposit insurance coverage for commercial banks from N500,000 to N5million.

This means that in the event of any bank failure, depositors with less than or equal to N5 million in their accounts as of the time of the liquidation will be immediately funded by the NDIC.

Abiru spoke in Lagos during the Stakeholders’ Retreat of the committee with NDIC with the theme, “Building Resilient Financial Systems through effective legislative interventions.”

The Senator was joined with the management of NDIC led by the Managing Director/Chief Executive, Mr. Bello Hassan and other committee members including Senators Aminu Waziri Tambuwal, Yahaya Abdullahi, Mohammed Tahiru Monguno, Issa Jibrin, among others.

According to Abiru, capturing nearly 99% of depositors which the increase in the insurance coverage represents has shown the commitment of the NDIC “to adapting to the changing economic landscape and ensuring that the interests of small depositors, in particular, are fully protected.”

The Senators also commended the NDIC for its role in resolving the issues surrounding the failed Heritage Bank, saying the process of settling depositors is never easy.

Daily Trust reports that Heritage Bank was in June 2024 liquidated and NDIC immediately move in to pay depositors of the failed bank.

The corporation has almost completed payment to the depositors.

Abiru said the dedication “to resolving this matter demonstrates the high standard of operational efficiency that we, as stakeholders, have come to expect from the NDIC.”

“Nevertheless, I urge the Corporation to ensure that maximum value is realized from the bank’s remaining assets, which will ultimately contribute to the settlement of outstanding depositors and other creditors,” he said.

The senator stated that as the financial system changes, the legislative frameworks must equally evolve especially in the face of threat posed by cyber crimes. “We must prioritise robust cyber security framework,” he said, adding collaboration and partnership would keep the nation’s financial system resilient.

The NDIC Boss in his welcome remark stated that building a resilient financial system requires trust and confidence.

He stated that the review of the coverage was done “to promote depositor confidence, mobilise savings and financial inclusion as important conditions for a stable banking system.”

He stated that the financial services sector has experienced significant transformation, largely driven by advances in technology, globalization and consolidation.

In the face of the change, he said stakeholders must “be conscious of the additional risks and complexities that the system may be further exposed to.”

“To address this concern, stakeholders, particularly charged with oversight functions, must collaborate more than ever before. In this collaborative effort, the legislature must be consciously determined to redesign the legal framework that will support the current financial advancement while promoting innovation and consumer protection,” he added.