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Most motgage banks can’t pay premium, says NDIC

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Managing Director/Chief Executive Officer of the Nigeria Deposit Insurance Corporation, Umaru Ibrahim

Managing Director/Chief Executive Officer of the Nigeria Deposit Insurance Corporation, Umaru Ibrahim

Nigeria Deposit Insurance Corporation (NDIC) said its planned Differential Premium Assessment System (DPAS) will further sustain growth and development for insured institutions.

It also said DPAS would promote better risk management in the banks in line with international best practices, as appropriate assessment of the yearly premium payable by Primary Mortgage Banks (PMBs) would be realised.

But the inability of about 65 per cent Primary Mortgage Banks (PMBs) to pay premium may cripple the commission’s efforts, Managing Director, NDIC, Umaru Ibrahim said in Lagos.

The premium contribution is an amount paid periodically to the insurer (NDIC) by the insured (PMBs) for covering their risk.

Speaking at the NDIC’s 2016 Sensitization Workshop for operators of Primary Mortgage Bank (PMBs), Ibrahim said 15 out of 42 PMBs could not meet their premium obligation.

DPAS, which allows lenders with higher risk to pay bigger premium to insure deposit of customers would further ensure fair pricing of insurance premium and reduction in premium, he added.

Expectations are that the adoption of DPAS in assessing the yearly premium payable by PMBs would promote better risk management in the banks in line with international best practises. Statistic shows that about 120 countries across the would have adopted DPAS as an objective method of insurance premium pricing.

“In his keynote address at the workshop, Ibrahim said: NDIC’s capacity to sustain its efforts in ensuring that insured institutions are put on the part of sustainable growth and development depends largely on the premium contribution.”

Stating that the agency would continue to review the NDIC Deposit Insurance Coverage (DIC) from time to time, Ibrahim noted that the workshop was organised to create awareness on the deployment and implementation of DPAS, acquaint operators with modalities for the implementation of DPAS and enhance sound enterprise risk management practice in the operations of PMBs.

The corporation’s Director in charge of Special Insured Institution Department, Etopidiok James said the challenges in the system financial sector, including bad loans were systemic in nature but the agency’s planned transformative business models would help address crucial sector challenges.


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