Tuesday, 29 November 2016

NDIC tasks mortgage banks on premium payment

As reported by punch news.

The Managing Director, Nigeria Deposit Insurance
Corporation, Alhaji Umaru Ibrahim, has appealed to the
management of the primary mortgage banks to ensure that
their premium contributions are paid promptly and regularly.

He said this was necessary because records had shown that
15 out 42 PMBs had yet to meet their premium obligations.

Ibrahim said this while delivering a keynote address at the
NDIC’s 2016 sensitisation workshop for operators of the
PMBs in Lagos.

The workshop had its theme as “Implementing Differential
Premium Assessment System in Primary Mortgage Banks in

The NDIC boss explained that the agency, as a risk
minimiser, had obtained the approval of the Minister of
Finance, Mrs, Kemi Adeosun, in August 2016 to deploy the
DPAS in computing the deposit insurance premium of the
PMBs as a way of encouraging market discipline.

He said, “The DPAS classifies banks into various risk
buckets and applies different premium rates depending on
the perceived riskiness of each risk bucket. The computation
trajectory incorporates sound strategic planning and
transformative business model.

“It also implicitly addresses the issue of moral hazard, which
guarantees caution and avoidance of excessive risk taking in
the interest of both operators and subscribers.”

While assuring the operators that the risk-based premium
system-DPAS-allows the institution to pay much less
premium than would have been the case with alternative flat
rate system, Ibrahim said the NDIC would continue to review
the deposit insurance coverage from time to time.

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