Business Briefs
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THE Nigeria Deposit Insurance Corporation, NDIC, has released the much-anticipated deposit insurance guidelines on the mobile payments system, MPS, known as the ‘Pass-Through Deposit Insurance scheme.’ The Pass-Through Deposit Insurance arrangement entails the protection provided by the NDIC to mobile money subscribers, whereby the corporation insures funds that are deposited by a Mobile Money Operator, MMO, in the deposit money banks, DMBs.
The new concept followed the introduction of mobile banking in the country by the Central Bank of Nigeria, CBN, which issued operating licences to several deposit money banks, DMBs, and telecommunication companies to provide mobile banking services as well as the need to provide succour to customers in the event of any failure.
Meanwhile, the MMO acts as a custodian on behalf of the one or more subscribers who are actual owners of the funds as if those actual owners have deposits in the DMBs. The NDIC Pass-Through Insurance for MMOs introduced up to the maximum coverage level of N500,000 per subscriber per Deposit Money Bank or the applicable coverage level for depositors in line with the NDIC Act.
Other salient aspect of the framework stipulated that subscriber’s funds in pool accounts, which are opened and operated by an MMO in a DMB on behalf of its subscribers and other deposits in the same institution under the same capacity shall be aggregated and insured up to the maximum coverage limit. It further specified that the relationship between the MMOs and their subscribers shall be based on Bare Trust Arrangement where each beneficiary holds a separate share and is entitled to protection within the parameters of the scheme.
It stated that all KYC (Know Your Customer) requirements on the owners of funds in Trust (Pool) accounts shall be fully met as specified by the CBN while records of the Trust (Pool) account holders at the insured institutions shall clearly indicate that the account holder is an agent or custodian acting in a fiduciary capacity, and not the actual owner of the funds. The funds must belong to the individual subscribers and not the agent or custodian, it added.
The guideline further stressed that insured institutions, MMOs and agents shall render returns in specified formats to NDIC on predetermined frequencies. The MMOs will also be required to take Fidelity Bond Insurance for any losses arising from the fraudulent acts of their staff and agents. The applicable rate of the fidelity insurance shall be specified by NDIC from time to time.
Ultimately, the NDIC shall issue regulations to operators on the implementation of the Pass-Through Deposit Insurance. The Pass-Through Deposit Insurance policy seeks among other things to guarantee the payment of insured sums to subscribers of MMOs in the event of failure of insured institutions where pool funds are maintained; enhance confidence of subscribers and ensure continuity of the MPS.
It also seeks to promote financial inclusion by protecting and ensuring the safety of the MPS and the stability of the Nigerian financial system.
— Feb 1, 2016 @ 01:00 GMT
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