Yemisi Izuora
The Nigeria Deposit Insurance Corporation (NDIC) is expediting processes that will lead to payment of depositors with over N5 million in the liquidated Heritage Bank.
The Managing Director/Chief Executive Officer (MD/CEO) of the Corporation, Bello Hassan, who made the promise said the NDIC has been instrumental in promoting stability by ensuring that when banks fail, depositors are protected, and their funds are reimbursed promptly.
While providing update on the payment process at the opening of the 2024 NDIC Business Editors and Finance Correspondents Association of Nigeria (FICAN) in Lagos, Hassan said the recent closure of Heritage Bank, following the revocation of its license by the CBN on June 3, 2024, underscores the NDIC’s critical role in safeguarding depositors.
He said that acting in accordance with the
relevant provisions of the Banks and Other Financial Institutions Act
(BOFIA) 2020 and the NDIC Act 2023, the NDIC was appointed
liquidator to manage the orderly resolution of the bank and oversee
the payment of its depositors and other claimants.
In the discharge of this critical role of depositor reimbursement, the
Corporation began the payment of the insured deposits of N5 million
maximum per depositor within a record time of four days of the
bank’s closure.
This was achieved using Bank Verification Numbers (BVN) as a unique identifier to locate depositors’ alternate accounts in other banks without the need to fill forms or visits the NDIC offices.
This innovative approach has indeed, enabled the payment of 84.98 per cent of depositors with BVN linked accounts to date.
Hassan went further to note that the prompt payment of depositors, coming at a time when the Corporation had also recently increased the deposit insurance coverage from N500,000 to N5 million in Deposit Money Banks, significantly
cushioned the negative impact of bank failure, especially during the
current challenging economic climate.
This achievement he added is consistent with the provisions of the International Association of Deposit Insurers (IADI) Core Principle 15, which emphasises timely payouts to depositors of failed bank.
According to the MD/CEO, having largely reimbursed depositors their insured deposits, the Corporation is committed to ensuring that depositors with balances exceeding N5 million are also paid the balance of their deposits.
These uninsured deposits represent a significant portion of the total
deposits in Heritage Bank.
In this regard, he informed that the Corporation is already working assiduously to ensure that, all depositors with amounts in excess of the maximum insured amount of N5 million are paid through liquidation dividends from the realisation of the defunct bank’s assets and recovery of debts.
The Corporation he disclosed has already initiated the process of debt recovery and realisation of investments and physical assets of the defunct bank to ensure timely payment of the uninsured deposits of the defunct bank.
Additionally, the NDIC’s responsibilities extend to the creditors of the
defunct bank, who will receive payments after all depositors have
been fully reimbursed.
This orderly process, based on asset realisation and priority of claims, is essential in maintaining public trust in the banking system and promoting financial stability.
The handling of the Heritage Bank liquidation illustrates the broader role of the NDIC in ensuring that even in times of financial disruption, depositors can be rest assured that their funds are protected.
Reflecting on the conference he said the theme of this year’s workshop: “Strengthening Nigeria’s Financial Safety-Net – The Role of Deposit Insurance,” is timely and highly relevant, especially in the light of the ever-evolving
dynamics of the global financial system and its implications for
Nigeria.
“As our financial system continues to evolve and face new
challenges, the NDIC remains steadfast in its mission to protect
depositors and collaborate with the Central Bank of Nigeria (CBN)
in ensuring the stability of the banking sector, which is critical to the
growth and development of the economy.
“Over the next two days, we will engage in deep discussions on key
aspects of Nigeria’s deposit insurance system, its evolution, innovations and future prospects.”
Hassan explained that the workshop is designed to enrich your understanding of the NDIC’s role in maintaining financial stability and protecting depositors, with presentations covering key issues that shape the Corporation’s activities and consumer
protection.
He went further to emphasise the important role of the media
and civil society groups, alongside corporate affairs managers of
banks, in advocating for the effective implementation of the deposit
insurance system.
Through their efforts, the achievements of the NDIC have become more visible and better understood, reinforcing the Corporation’s enduring impact in contributing to the stability of the financial system, he acknowledged.
He ended by saying that “By working together, we can continue to build
a more resilient financial system that protects the interests of all
stakeholders. Your dedication to promoting the understanding of the
NDIC’s mandate and activities has been pivotal in deepening public
trust in Nigeria’s banking system.”