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 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 Nigeria. 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.