The Nigeria Deposit Insurance Corporation has granted the sum of N192.6bn as rebate on insurance premium to Deposit Money Banks in the last three years.
The corporation explained that the reduction of the insurance premium paid by the DMBs from 0.5 per cent to 0.40 per cent was responsible for the figure.
A breakdown of the N192.6bn showed that a rebate of N53bn was granted in 2012, while N63.6bn and N75.98bn were given as rebates in 2013 and 2014, respectively.
It said, “The corporation began the insurance premium rebate since the commencement of the Differential Premium Assessment System in 2008 but the import began in 2010 sequel to the Board’s decision to contribute to the Financial Stability Fund that was spearheaded by the Central Bank of Nigeria.
“The corporation had supported the fund through the reduction of premium base rate from 50 to 40 basis points to reduce the premium burden on the DMBs.
“By 2012, 2013 and 2014, the corporation had granted a total rebate of N53bn, N63.6bn and N75.98bn, respectively; thus a cumulative rebate sum of N192.6bn to the DMBs.”
The decision to reduce the insurance premium, it said, was initiated to consolidate on the gains achieved by the migration from the Flat Rate Premium System to Differential Premium Assessment System.
The DPAS approach takes into consideration the risk each bank poses to the system and encourages them to adopt sound risk management practices.
To further consolidate on this migration, the statement said the corporation had again approved that the insurance premium be further reduced from 0.4 per cent to 0.35 per cent.
The new rate, it stated, would take effect from the beginning of this month.
“The NDIC has further reduced the deposit insurance premium rate to all Deposit Money Banks in Nigeria as part of efforts toward contributing to financial system stability and promoting public confidence in the banking industry.
“The board had reduced the insurance premium basis rate from the existing 40 to 35 basis points and the new premium rate will take effect from January this year. The insurance premium rebates were part of the NDIC’s major contributions toward improving the intermediation role and other banking-related activities of the DMBs,” a statement from the company said.
NDIC said premium collection from the insured banks over the years had helped to contribute substantially to the funds available to the NDIC to discharge its mandate.
The corporation currently covers 97 per cent of the bank depositors, noting that this was an indication of adequate coverage and appropriate pricing.