By Yakubu LAAH InvestAdvocate
Lagos (INVESTADVOCATE)-The Nigeria Deposit Insurance Corporation (NDIC) on Friday said it has granted N192.6 billion rebate on insurance premium to banks in the last three (3) years, it said in a statement.
According to the Corporation, the reduction of the premium base rate paid by Deposit Money Banks (DMBs) from 50 to 40 basis points was responsible for the N192.6 billion rebate.
A breakdown of this figure shows that by 2012, 2013 and 2014, the NDIC had granted a total rebate of N53 billion, N63.6 billion and N75.98 billion respectively.
Coming on the heel of this, Umaru Ibrahim, managing director (MD) of the Corporation said its board had granted further relief to the DMBs by reducing the insurance premium basis rate from the existing 40 to 35 basis points.
According to him, the insurance premium rebates were part of the NDIC major contributions toward improving the intermediation role and other banking related activities of the DMBs.
“The Corporation began the insurance premium rebate since the commencement of Differential Premium Assessment System (DPAS) in 2008 but the import began in 2010 sequel to the Board’s decision to contribute to the Financial Stability Fund that was spearheaded by the Central Bank of Nigeria (CBN),” Ibrahim added.
The NDIC MD noted that Principle 11 of the Core Principles for Effective Deposit Insurance System requires Deposit Insurance Agencies (DIAs) to set aside adequate funds to ensure depositors’ prompt reimbursement in the event of any bank failure. “The Corporation would from 2015 set new coverage levels for the DMBs in view of their relatively large volumes of deposits,” he affirmed.
The Corporation said this move is part of its efforts toward contributing to financial system stability and promoting public confidence in the banking industry.
It further affirmed that the premium reduction was initiated to consolidate on the gains achieved by the NDIC’s migration from Flat Rate Premium System (FRPS) to DPAS approach which takes into consideration the risk each bank poses to the system and encourages banks to adopt sound risk management practices.
