INSURABLE DEPOSITS AND THE INSURANCE POLICY UNDER THE NDIC ACT 2006
By Section 15 of the NDIC Act, all licensed banks and other deposit-taking financial institutions are required to insure their deposits with the Corporation and this was further made mandatory by the provisions of Section 16 of the Act, with the following exceptions:
a. Insider deposits, i.e., deposits made by the staff of the financial institution and this includes the directors.
b. Counter-claims from a person who maintains both deposit and loan accounts, the former serving as collateral for the latter,
c. Such other deposits as may be specified from time to time by the board.
The law further provides for sanctions for failure to comply with the above for both the financial institution and its principal officers.
The insurance policy of the NDIC as provided by the Act requires the financial institutions to pay to the Corporation, a premium not exceeding fifteenth-sixteenth (15/16) of one per cent per annum of the total deposit liabilities of the institution standing in its books as of December of the preceding year, in the case of a licensed bank, and eighth-sixteenth (8/16) of one per cent per annum of the total deposit liabilities of the institution, in the case of other financial institutions. In determining the deposit liabilities of the financial institution, it shall be as certified by the approved auditor of the institution, forwarded to the Corporation on or before the 31st of January, of the following year and the premium shall be payable to the Corporation not later than 2 months from the date of the demand notice.
In calculating the premium payable by a financial institution, a mathematical illustration is given below.
Where the deposit liabilities of a financial institution is 5 billion Naira, the premium payable by the financial institution shall be:
15/16 of 5,000,000,000÷100 = 15/16×50,000,000 (50 million Naira being 1 per cent of 5 billion Naira)
0.9375×50,000,000 = 46,875,000
Hence the premium payable by the financial institution in the above circumstance is #46,875,000.