 
 FAQ [ Facts About Deposit Insurance ]
1. What is Deposit Insurance ?
Deposit Insurance is a financial guarantee instituted as a measure of safety for the banking system to protect depositors. Deposit Insurance ensures that the depositor does not lose all his money in the event of a bank failure. Deposit Insurance promotes the stability of the banking system. It assures the saver that his funds are safe, and that the failure of one bank does not mean that all banks are in danger of failing. Since Deposit Insurance makes a bank failure an isolated event, it eliminates the danger that unfounded rumours will start a contagious bank run.
2. Are all financial institutions insured by NDIC?
No. NDIC insures deposits in Universal banks and other licensed deposit-taking financial institutions.
3. How does the NDIC protect bank depositors against loss ?
Each insured bank must meet high standards of safety and soundness in its banking practices. Adherence to these standards is determined through regular bank examinations by the regulatory authorities: the NDIC and the Central Bank of Nigeria. If despite these precautions, an insured bank gets into financial difficulties and must be closed for purposes of liquidation, the NDIC is on hand promptly with cash to relieve a depositor up to the maximum of N50,000 or any other amount as may be revised from time to time.
4. What is deposit ?
Deposit in this context means monies lodged by the general public with any insured bank or financial institution whether or not it is for safe-keeping or for the purpose of earning interest or dividend, whether or not such monies are repayable upon demand, upon a given period of notice or upon a fixed date.
5. What does the basic insurance afford a depositor ?
The basic insured amount for a depositor is N50,000. A depositor is thus insured up to N50,000 in the aggregate with respect to deposits he or she holds in the same right and capacity in each insured bank including all domestic branches of the bank. (The terms " Right and Capacity" refer to the nature of ownership of deposits, such as individual, joint or trust deposits.). A depositor may obtain more coverage by opening like accounts at different insured banks, but not at different branches of the same bank. But deposits maintained in different rights and capacities are each separately insured up to N50,000. Thus, a person may hold or have an interest in different capacities in more than one separately insured account in the same insured bank.
6. Is the insurance protection increased by placing one's fund in two or more of the types of deposit account in the same bank?.
No. Deposit Insurance is not increased merely by dividing funds owned in the same right and capacity among the types of deposits in the same bank . For example, current and savings accounts owned by the same depositor in the same right and capacity in the same bank are added together and insured up to N50,000.
7. If a depositor has deposit account in several different insured banks will the deposits be added together for the purpose of determining insurance coverage?
No.The maximum insurance of N50,000 is applicable to deposit in any insured bank. In the case of a bank having one or more branches, the main office and all branch offices are considered as one bank. In summary, if a person has many accounts in one bank, all the deposits are taken together as one account even if the deposits are in various branches of the same bank. On the contrary, however, if a depositor has accounts in more than one bank, they are insured independently up to a maximum of N50,000 in each bank.
8. If a husband and wife or any two or more other persons, have, in addition to the individually-owned accounts in the same insured bank is each account separately insured?
Yes. If each of the co-owners has personally signed a valid account signature card and has a right of withdrawal on the same basis as the other co-owners, the joint account and each of the individually-owned accounts are separately insured up to N50,000 maximum. However, the insurance protection on joint accounts is not increased by establishing more than one joint account for the same combination or owners in the same insured bank. No joint account shall in any case be entitled to insurance coverage in excess of N50,000.
9. If a person has an interest in more than one joint account, what is the extent of his or her insurance coverage?
All Joint Accounts owned by the same combination of individuals are first added together and the total is insurable up to N50,000. Then the Person's insurable interest in each Joint Account owned by different combinations of individuals are added together and the total is insured up to the N50,000 maximum.
10. Are accounts held by a person as executor, administrator, guardian, custodian, or in some fiduciary capacity insured separately from his or her individual accounts?
Yes. If the records of the bank indicate that the person deposited the funds in fiduciary capacity such funds are insured separately from the fiduciary's individually-owned account. Funds in an account held by an Executor or Administrator are insured as funds of the (deceased's) estate. Funds in accounts held by guardians , conservators or custodians (whether court-appointed or not )are insured as funds owned by the ward and are added to any individual accounts of the ward in determining the N50,000 maximum.(Accounts in which the funds are intended to pass on the death of the owner to a named beneficiary, are considered testamentary accounts and are insured as a form of individual account . If the beneficiary is a spouse, child or grandchild of the owner , the funds are insured for each owner up to a total of N50,000 separately from any other individual accounts of the owner. If the beneficiary is other than a spouse, child or grandchild of the owner, the funds in the account are added to any other individual account of the owner and insured to a total of N50,000. In the case of a Revocable Trust Account, the person who holds the power of revocation is considered the owner of the funds in the account.)
11. Does NDIC protect the interests of creditors or shareholders of a failed bank?
No. Insurance protects only deposits as described in response to question number 4 above.
12. When an account is held by a person designated as agent for the true owner of the funds, how is the account insured?
The account is insured as an account of the principal or true owner. The funds in the account are added to any other accounts owned by the owner and the total is insured to the maximum of N50,000.00
13. Is an account held by company or partnership, insured separately from the individual accounts of share-holders or partners?
Yes. If the company or partnership is engaged in an independent activity, its acccount is separately insured to a total of N50,000.00. The term "Independent activity" means any activity other than one directed solely at increasing insurance coverage.
14. If a depositor has more than N50,000.00 deposit in a closed insured bank,does he retain his claim against the bank for the amount of his deposit in excess of the N50,000.00 insurance paid by the corporation?
Yes. Owners of deposit claims in excess of N50,000.00 will share pro-rata in any proceeds from the liquidation of the bank's assets with other general creditors including the corporation.
15. Can insured status in the NDIC be terminated?
Yes. But notice is always given to depositors before termination of insurance.
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