The Nigeria Deposit Insurance Corporation (NDIC) would from next week be visiting headquarters of banks to explain the determine premiums that banks should pay.
A senior bank official in a tier one bank, who said that the corporation had written to banks’ managing directors informing them of the planned visit, confirmed that the visit had become necessary to educate bank executives who were growing weary of the deposit insurance premiums that they pay.
The official said that the banks would like to know why there are different premiums for different banks.
According to the banker, “banks in the country operate in the same environment but pay different premiums. So, we need to understand how the premiums are arrived at’’.
An official in the operations department of the NDIC also confirmed the scheduled visit of the corporation.
He said that the visit and attendant instruction was “to bring the banks up to speed on the recent review of Differential Premium Assessment System (DPAS) framework”.
According to the NDIC official, “after the visit, we would have been able to expose the bankers to what we call DPAS.
The NDIC official also said that it had discovered “most banks do not know how premium is determined. So, the department responsible for charging premium from next week will be going to all bank head offices to show Executive Directors and their compliance officers how we compute premium bank-by-bank”.
The training, he said, had become necessary to reinforce the importance of “ethics and principles in the way to conduct affairs in every organisation”.
Premium base rate in Nigeria, he explained, is uniform and operated “on the same quantitative template”.
He said: “Banks are the most regulated entities in the world, because once people do not have confidence in their banks, then that economy has collapsed”.
Over the years, the NDIC, he said, has increased the premium that banks pay in order to effectively settle claims made by depositors of distressed banks. “We started by doing N50,000, then moved to N100,000, N200,000 and now N500,000” he said.
Last week, the NDIC solicited for contributions from critical stakeholders to make the DPAS framework document more robust and all embracing.
The NDIC said that the framework was reviewed to make it more risk-sensitive and account for significant developments that had taken place in the Nigerian banking system since its adoption in 2008, like the upsurge in electronic fraud in the banking system.
The review that NDIC said “was informed by the need to ensure that the framework conforms to the recommendations of the International Association of Deposit Insurers (IADI) and other global best practices.
Now that the review of the DPAS framework is at consultation stage, the NDIC believes “it is imperative for the corporation to solicit input from its critical stakeholders”.
To get the buy-in of the stakeholders, the exposure draft of the DPAS framework has been placed on the corporation’s website: www.ndic.gov.ng for review.
Stakeholders have been urged to forward their input, comments and recommendations to NDIC Director, Insurance and Surveillance Department latest by 30th June 2023.
