Non-interest banks to start paying premiums soon, says NDIC
Non-interest Deposit Money Banks will soon start making premium contributions to the Nigeria Deposit Insurance Corporation (NDIC), the Managing Director, Alhaji Umaru Ibrahim, has said.
Ibrahim, who spoke yesterday at the sensitisation seminar for NDIC solicitors in Abuja. said these bank’s deposit insurance coverage is different from other conventional banks since it is governed by non-interest banking philosophy and regulations.
He said: “We will soon request them (non-interest deposit money institutions) to start making their contributions. In a couple of weeks, Jaiz bank will soon start paying premium or contributions having clocked one year, and also, Stanbic-IBTC Bank’s non-interest window will also attract coverage.”
What the NDIC will do is that the monies collected by way of premium will be separated from monies or premiums collected on interest bearing deposits, he said, adding that such collection will be invested in non-interest bearing instruments that the Debt Management Office and the Central Bank of Nigeria are trying to float.
He explained that should “such a bank go under and we come to reimburse depositors, monies that would be paid will also be compliant with the regulations of non-interest banking.”
On how much depositors of non-interest organisations would be entitled to in the event of such institutions failing, the NDIC boss said, “it will be within the normal threshold for conventional banks and financial institutions.
“If it is a normal interest bearing institution, we pay you N500,000 upfront if the bank fails, and then subsequent payments would be made as we recover debts, and if it is a microfinance bank or a primary mortgage institution, we pay N200,000 upfront. So it is the same threshold for non-interest deposits.”
The NDIC boss lamented that the corporation was having difficulties recovering debts owed to failed banks due to the corporation’s “inability to trace the debtors, lack of collateral and other related challenges.”
He identified other challenges the corporation is facing to include; “the problems of excessive litigations which makes it difficult for the corporation to wind up failed banks and settle depositors and other creditors within reasonable time; execution of court judgements against the assets of the corporation as the liquidator of failed banks based on the misunderstanding of the role of NDIC, and the lack of proper understanding of the distinction in the legal status of NDIC as liquidator/deposit insurer by legal practitioners, the court and the public,” he said.