BUSINESS

9 Commercial Banks Pay N166.4bn As Deposit Insurance Premium To NDIC In 2023

 

Nine commercial banks paid a sum of N166.4 billion as a deposit insurance premium to the NDIC in 2023, 29.3% higher than the N128.7 billion recorded in the previous year, this is according to data extracted from the audited financial statements of the banks as published on the Nigerian Exchange (NGX).

The banks include; FirstBank, Wema Bank, Fidelity Bank, United Bank for Africa (UBA) and GTBank.

Total bank deposits also rose by 69.9% year-on-year from N49.59 trillion in 2022 to N84.29 trillion in 2023. 

The amount paid as deposit insurance premium by the nine banks under consideration in 2023, represented about 0.197% of total deposits in contrast to 0.26% in 2022. 

Owing to the importance of the financial services sector, involving public funds, there is a need for buffers to protect public funds in case of bank failure or liquidation, hence, the need for deposit insurance. 

Deposit insurance is one of many layers put in place to protect public funds and ensure the stability of the banking sector. Some others include the bank resolution fund and the AMCON Sinking Fund. 

Deposit Insurance Premium is a statutory payment by deposit-taking banks that ensures that NDIC as an insurer guarantees the payment of deposits up to the maximum limit (Now N5 million) in accordance with its statute in the event of failure of an insured financial institution. 

Typically, banks with the largest deposits pay the most premium to NDIC in terms of absolute numbers. However, some banks pay higher relative to their deposits based on a pricing mechanism. 

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