The Nigeria Deposit Insurance Corporation (NDIC) has successfully reimbursed 84.98% of depositors from the now-defunct Heritage Bank, using Bank Verification Numbers (BVN) to streamline the payout process. This was disclosed by the Managing Director/CEO of NDIC, Mr. Bello Hassan, during the 21st edition of the NDIC Workshop for Business Editors and the Finance Correspondents Association of Nigeria (FICAN) in Lagos.
Themed “Strengthening Nigeria’s Financial Safety-Net – The Role of Deposit Insurance,” the workshop emphasized the critical role of the NDIC in protecting depositors and maintaining financial stability, particularly in the context of global financial changes that are impacting Nigeria.
Hassan noted that the Central Bank of Nigeria’s (CBN) revocation of Heritage Bank’s license on June 3, 2024, underscored the importance of the NDIC’s mandate. Under the provisions of the Banks and Other Financial Institutions Act (BOFIA) 2020 and the NDIC Act 2023, the NDIC was appointed as liquidator, charged with managing the orderly resolution of the bank and reimbursing depositors.
In a groundbreaking move, NDIC implemented the use of BVN as a unique identifier to locate depositors’ alternate accounts in other banks, eliminating the need for depositors to fill out forms or visit NDIC offices. This innovation enabled the NDIC to begin disbursements of insured deposits within four days of Heritage Bank’s closure, with each depositor receiving up to N5 million.
“The use of BVN allowed us to efficiently pay 84.98% of depositors with linked accounts, without the typical delays associated with bank failures,” Hassan stated.
The timely reimbursement came in conjunction with NDIC’s recent increase in deposit insurance coverage, raising the insured amount from N500,000 to N5 million per depositor in Deposit Money Banks. This significant increase cushioned the impact of the bank’s failure, especially given the challenging economic climate. Hassan emphasized that this achievement aligns with the International Association of Deposit Insurers (IADI) Core Principle 15, which stresses the importance of prompt payouts to depositors of failed banks.
In addition to reimbursing insured deposits, Hassan assured that depositors with balances exceeding N5 million would receive the remainder of their funds through liquidation dividends, sourced from the recovery of Heritage Bank’s assets and debts. He also reiterated NDIC’s commitment to repaying creditors after depositors have been fully reimbursed, ensuring an orderly and transparent resolution of the bank’s affairs.
“The Corporation has already begun recovering debts and realising investments and physical assets of the defunct bank to ensure that depositors with uninsured deposits receive their funds in a timely manner,” Hassan explained.
He further highlighted that NDIC’s role extends beyond depositor protection, as it plays a critical part in maintaining public trust and promoting stability within the Nigerian banking sector. The careful handling of the Heritage Bank liquidation, according to Hassan, demonstrates the NDIC’s broader responsibility to ensure that depositors’ funds are protected, even in times of financial disruption.
As Nigeria’s financial system evolves, Hassan assured the public that NDIC remains committed to safeguarding depositors, working closely with the Central Bank of Nigeria (CBN) to uphold the stability of the banking sector—an essential pillar for the country’s economic growth and development.
“Confidence is key to maintaining financial stability, and deposit insurance serves as a crucial safety net to reassure depositors and prevent bank runs during periods of uncertainty,” Hassan added.
Over the years, the NDIC has played an instrumental role in preserving stability by ensuring prompt reimbursement of depositors’ funds in the event of bank failures, thereby fostering confidence in Nigeria’s financial system.
