The Nigeria Deposit Insurance Corporation (NDIC) has made significant strides in compensating customers of the defunct Heritage Bank, announcing that it has paid out 86 percent of the total insured deposits. The remaining 14 percent of insured deposits are yet to be disbursed, with ongoing efforts to address various challenges hindering these payments......See Full Story>>.....See Full Story>>
The update was shared by the NDIC’s Managing Director, Mr. Bello Hassan, during a recent retreat for the House of Representatives Committee on Insurance and Actuarial Matters, held in Lagos. Represented by Mrs. Emily Osuji, the Executive Director of Corporate Services, Hassan highlighted the specific issues delaying the final payments. Among these are accounts with Post No Debit (PND) instructions imposed by courts or regulatory authorities, Know Your Customer (KYC) limitations, and customers who have yet to complete necessary verifications, such as linking their Bank Verification Numbers (BVN) or providing alternative bank accounts.
Hassan emphasised that the NDIC’s actions align with the federal government’s commitment to sustainable economic growth by fortifying the financial system. The NDIC, in collaboration with the Central Bank of Nigeria (CBN), has been vigilant in its role of protecting depositors and ensuring financial stability through rigorous supervision of insured institutions.
“This approach is consistent with Principle 8 of the International Association of Deposit Insurers (IADI) Core Principles for Effective Deposit Insurance,” Hassan explained. “These principles recommend regular reviews of deposit insurance coverage to ensure it remains credible, adequately protects the majority of depositors, and mitigates the risk of bank runs while leaving some deposits exposed to market discipline.”
Reflecting this commitment, the NDIC conducted a review in 2023, leading to a substantial increase in deposit insurance coverage. As approved by the Corporation’s Interim Management Committee (IMC) in April 2024, coverage for Deposit Money Banks (DMBs) and Mobile Money Operators (MMOs) was raised from N500,000 to N5 million. For Payment Service Banks (PSBs) and Primary Mortgage Banks (PMBs), coverage increased from N500,000 to N2 million, while Microfinance Banks (MFBs) saw their coverage rise from N200,000 to N2 million. These adjustments ensure nearly full coverage for depositors across these institutions, significantly boosting depositor confidence.
Hassan also highlighted the importance of timely reimbursement to depositors as a cornerstone of financial stability. In this regard, the NDIC has reassessed its payment methodology, adopting a new approach that ensures prompt payments. This was successfully tested with the recent payout to depositors of the liquidated Heritage Bank, where the NDIC utilized depositors’ BVNs, obtained from the Nigeria Inter-Bank Settlement System (NIBSS), to access alternative accounts and initiate payments within an unprecedented four days.
Despite these successes, Hassan acknowledged the concerns of uninsured depositors. He assured that the NDIC is actively pursuing debt recovery and the liquidation of Heritage Bank’s investments and physical assets to facilitate the reimbursement of uninsured deposits. Following the payoff of both insured and uninsured deposits, the Corporation will proceed with compensating creditors and others according to the priority of claims as stipulated by law.
The NDIC’s commitment to strengthening Nigeria’s financial system extends beyond just payouts. Hassan reaffirmed the Corporation’s dedication to effectively supervising all licensed deposit-taking institutions, maintaining robust early warning systems, conducting stress tests, and enforcing prompt corrective actions for identified deficiencies. These efforts are vital to reinforcing public confidence and contributing to the overall stability of the financial system.
Following the retreat, the Chairman of the House Committee on Insurance and Actuarial Matters, Ahmadu Usman Jaha, expressed the committee’s unwavering support for the NDIC. Jaha acknowledged the critical role of the NDIC in safeguarding deposits and pledged the committee’s readiness to review and update policies to address emerging risks in the financial sector.
“In recent years, our financial systems have faced various challenges, from global economic shifts to regulatory hurdles and unforeseen crises,” Jaha remarked. “These challenges highlight the need for robust deposit insurance frameworks that protect depositors and bolster confidence in our banking systems.”
Jaha emphasised the importance of collaboration between government bodies, financial institutions, and stakeholders to enhance regulatory frameworks. He also called for increased financial literacy, the promotion of savings, and the leveraging of technology to fortify Nigeria’s financial stability.
“A resilient economy is one that can withstand shocks and continue to thrive,” Jaha concluded. “As we strengthen our deposit insurance schemes, we must also address broader economic factors that contribute to resilience, ensuring that our financial stability is not just maintained but enhanced for future generations.”