NDIC Reduces Premium Basis Rate For Banks

The Nigeria Deposit
Insurance Corporation (NDIC) has announced the reduction of the insurance premium rate for all Deposit Money Banks (DMBs) in the country.
The managing director/chief executive, NDIC, Alhaji Umaru Ibrahim who disclosed this to newsmen on Monday in Abuja said the bank’s board granted further reliefs to the DMBs at its last meeting for 2014.
Ibrahim said by the NDIC reducing the insurance premium basis rate from the existing 40 to 35 basis points it meant well for the DMBs, stressing that the reduction is part of the corporation’s determination to contribute to the financial system stability and promote public confidence in the banking sector.
He said the premium reduction was initiated to consolidate on the gains achieved by the corporation migration from Flat Rate Premium System (FRPS) to Differential Premium Assessment System (DPAS).
The NDIC boss explained that the DPAS approach takes into consideration the risk each lender poses to the system and encourages them to adopt sound risk management practices.
He said that principle II of the core principles for effective deposit insurance system requires Deposit Insurance Agencies to set aside adequate funds to ensure depositors prompt reimbursement in the event of any failure.
The NDIC boss said the corporation would from 2015 set new coverage levels for the DMBs in view of their relatively large volumes of depositors, stressing that the new premium rate would take effect from this January.
He said the insurance premium rebates were part of the corporation’s major contributions toward improving the intermediation role and other banking related activities of the DMBs.