NDIC seeks stakeholders’ inputs towards robust Differential Premium Assessment System Framework

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Following the recent review of its Differential Premium Assessment System (DPAS) Framework, the Nigeria Deposit Insurance Corporation (NDIC) has sought input from critical stakeholders towards making the document more robust and all embracing. In a release by the Director, Communication and Public Affairs Department, Bashir Alhassan Nuhu.

The NDIC said the Differential Premium Assessment System Framework was reviewed to make it more risk sensitive and account for significant developments that had taken place in the Nigeria banking system since its adoption in 2008. It stated further that the review was informed by the need to ensure that the framework conforms to the recommendations of the International Association of Deposit Insurers (IADI) and other global best practices.

The NDIC adopted the Differential Premium Assessment System (DPAS) in 2008 following the issuance of its framework in 2007 to differentiate premiums payable by Insured Financial Institutions based on their respective risk profile.  The DPAS is aimed at introducing fairness into the premium assessment process, encouraging effective risk management practices in insured institutions and applying a risk differential approach in the deposit insurance premium assessment of insured financial institutions.

 The DPAS was also introduced to enable banks in the lower risk categories to pay relatively lower premium rates, charge banks in the higher risk categories additional premium for their extra risks, incentivise regulatory compliance and mitigate moral hazard.

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