The Nigeria Deposit Insurance Corporation (NDIC) has announced a plan to improve its Differential Premium Assessment System (DPAS) Framework through stakeholder input.
The DPAS, implemented in 2008, aims to differentiate premiums paid by insured financial institutions based on their risk profiles.
According to a press statement signed by the Director, Communication and Public Affairs Department, Bashir Nuhu, the recent review of the framework is intended to make it more risk-sensitive and aligned with global best practices.
The NDIC urged concerned parties to provide their input, comments, and recommendations by 30 June 2023 to ensure a comprehensive and robust document.
The NDIC emphasised that reviewing the DPAS framework is essential to accommodate significant developments in the Nigerian banking system since its adoption.
The revision also aims to align with the recommendations of the International Association of Deposit Insurers (IADI) and ensure compliance with global standards.
The NDIC says the adoption of the DPAS in 2008 introduced fairness into the premium assessment process, encouraging effective risk management practices among insured institutions.
The system applies a differential risk approach in determining deposit insurance premiums, allowing lower-risk banks to pay relatively lower rates while charging higher-risk banks additional bonuses for their increased risks.
The primary objectives are to incentivise regulatory compliance, mitigate moral hazard, and maintain a sound and stable banking sector.
To facilitate stakeholder engagement, the NDIC has made the exposure draft of the revised DPAS framework available on its official website, www.ndic.gov.ng, for review.
Interested parties, including financial institutions, industry experts, and the public, are encouraged to provide their insights and recommendations to the NDIC Director, Insurance and Surveillance Department, via email at firstname.lastname@example.org before the deadline of 30 June 2023.
The NDIC says its proactive approach in seeking concerned party input reflects its commitment to enhancing the banking system’s risk assessment and maintaining a resilient financial sector.
The corporation noted that it aims to develop a more comprehensive and robust DPAS framework that effectively addresses the evolving need of Nigeria’s banking industry; by incorporating feedback from critical parties,