The Nigeria Deposit Insurance Corporation (NDIC) on Friday released deposit insurance guidelines on the Mobile Payments System (MPS), known as “Pass-Through Deposit Insurance scheme”.
A statement by the corporation in Abuja, said the guideline was released following the introduction of mobile banking in Nigeria by the Central Bank of Nigeria (CBN).
It explained that CBN issued operating licences to many deposit money banks (DMBs) and telecommunication companies to provide mobile banking services.
It said Pass-Through Deposit Insurance scheme was the protection by NDIC to mobile money subscribers, whereby the corporation insures funds deposited by a Mobile Money Operator (MMO) in the deposit money banks (DMBs).
“The MMO acts as a custodian on behalf of the subscribers who are actual owners of the funds as if those actual owners have deposit in the DMBs.
“MPS refers to payment services operated under financial regulation and performed through the use of mobile devices such as smart phones, cell phones, personal digital devices and other electronic devices.
“It is also a safe and affordable way by which subscribers make instant transfer of funds and execute payments for goods and services from anywhere at any time without having a bank account.
“It guarantees the payment of insured sums to subscribers of MMOs in the event of failure of insured institutions where pool funds are maintained.
“It enhances confidence of subscribers and ensures continuity of the MPS and promotes financial inclusion by protecting and ensuring the safety of the MPS.
“It also promotes the stability of the Nigerian financial system,” the statement read in part.
It named participants of the scheme to include, MMO, payment agent, pool account, banks, customers and Mobile Network.
According to the statement, some of the salient elements of the NDIC Pass-Through Insurance consist of the following:
“Subscribers of MMOs shall be insured up to the maximum coverage of N500,000.00 per subscriber per DMB or the applicable coverage level for depositors in line with NDIC’s Act.
“Subscribers’ funds in pool accounts and other deposits in the same institution under the same capacity shall be aggregated and insured up to the maximum coverage limit.
“The relationship between the MMOs and their subscribers shall be based on Bare Trust Arrangement and KYC requirements on the owners of funds in Trust (Pool) accounts shall be fully met as specified by the CBN,” it said.
It said the records of the Trust (Pool) account holders at the insured institutions would clearly indicate that the account holder was an agent or custodian acting in a fiduciary capacity.
It further said the funds must belong to the individual subscribers and not the agent or custodian.
“The insured institutions, MMOs and Agents shall render returns in specified formats to NDIC on predetermined frequencies,” it added.
It stated that MMOs shall be required to take Fidelity Bond Insurance for any losses arising from fraudulent acts of their staff and agents.
It further said that the applicable rate of the fidelity insurance shall be specified by NDIC from time to time.
The statement noted that NDIC would issue regulations to operators on the implementation of the Pass-Through Deposit Insurance.
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