THE Nigeria Deposit Insurance Corporation (NDIC) has developed a framework for insuring liabilities on non-interest banking deposits in the country.

The development was sequel to the successful take-off of the non interest banking in Nigeria, through the current initiatives of Ja’iz, Stanbic IBTC and Sterling banks.

Non-interest banking deposits were hitherto not covered by NDIC’s deposit insurance scheme.

A non-interest banking model offers products, engages in trading, investments and commercial services without conventional interest charges. It is rather restricted to a profit and loss sharing formula on its products.

The non-interest deposits to be covered by the NDIC’s deposit insurance scheme are safe keeping deposits (wadi’ah); interest free deposits for investment (Qard); profit sharing/loss bearing deposits (mudarabah); profit and loss sharing deposits (musharakah); and any other deposit type that is non-interest based and approved by the Central Bank of Nigeria (CBN).

Those that will not attract insurance coverage of NDIC under the banking model are insider deposits , that is, deposits of staff, including directors of non-interest banks or financial institutions; counter-claims from one person who maintains both a deposit account and a non-interest bearing loan account and or a loan based on murabahah financing where the deposit account serves as a collateral for either or both of the loan accounts; and inter-bank takings.

The maximum deposit insurance coverage for the non-interest banking institutions would be the same as the conventional banks, that is, N500,000 and N200,000 per depositor per account in Deposit Money Banks (DMBs) and Microfinance Banks (MFBs) respectively.

NDIC, in its release yesterday, explained that “the public policy objectives of the framework are based on public interest, which seeks to provide corresponding protection to holders of non-interest financial products similar to that of conventional banks.”