NDIC Begins Payment Of Depositors Of 46 Failed MFBs

Following the recent revocation of the licenses of 46 microfinance banks by the Central Bank of Nigeira (CBN), the Nigeria Deposit Insurance Corporation (NDIC) said it has commenced the settlement of depositors of the defunct banks, even as it said it has paid off 700,000 customers of the defunct Heritage banks.

Speaking on Wednesday at the at a retreat for members of the House of Representatives Committee on Insurance and Actuarial Matters in Lagos, Managing Director and Chief Executive of the NDIC, Mr Oludare Sunday, disclosed that the Corporation had already begun reimbursing insured depositors after the CBN appointed the NDIC as provisional liquidator of the failed institutions.

“We are working on those. The CBN revoked the licenses, and we were appointed as the provisional liquidator. We have started paying depositors of those banks, and gradually we intend to cover all the insured depositors,” he said.

Sunday explained that beyond settling the insured portion of deposits, the Corporation had also commenced the recovery of debts owed to the failed institutions and the disposal of their assets to enable payment of uninsured depositors.

“Our function as liquidator involves the payment of guaranteed sums. Thereafter, we go after those who owe the institutions and have not paid. We also ensure that we sell the available assets and realize their investments towards paying the uninsured portion of the deposits. So, we have started paying the guaranteed deposits. What we are doing now is also realizing the assets of those institutions,” he added.

The NDIC boss, however, declined to state the number of depositors already paid, saying it is working in collaboration with the Nigerian Interbank Settlement System (NIBSS) to trace depositors through their Bank Verification Number (BVN) so as to make payment automatically. “So, the more accounts we discover, the more payments we make.”

Giving an update on the liquidation of Heritage Bank, the NDIC boss disclosed that about 700,000 depositors had already received their insured deposits, while efforts were ongoing to trace others who could not be identified through available records.

He attributed the challenge to legacy accounts created before the introduction of the BVN system and inadequate customer information. “For the guaranteed sum, we do not need you to come forward before you are paid. Of course, there are challenges in the Nigerian system.

“If you know Heritage Bank, you know it is an amalgamation of several banks, including the acquisition of Enterprise Bank in 2014. So, if you think of banks like Guardian Express and Spring Bank, they are all part of Heritage Bank.

“There are depositors we have not been able to trace, and this is an opportunity for them to come forward. I am sure many of us did the National Youth Service Corps (NYSC) and may have left some money in an account, but there was no BVN then.

“Even the addresses we had were sometimes things like ‘opposite filling station.’ How do you trace such a person? Once they come forward, and for those we have been able to identify from the institution’s database, we have been paying them,” he stated.

He added that the Corporation would continue recovering outstanding loans and disposing of the failed bank’s assets to generate funds for the payment of liquidation dividends to depositors with balances above the insured limit.

Speaking earlier at the retreat, Sunday said the NDIC remained a critical pillar of Nigeria’s financial safety net, stressing that stronger collaboration between regulators and the National Assembly had become increasingly important as the banking industry adjusts to recapitalization and rapid fintech innovation.

He noted that while recapitalization had strengthened the resilience of banks, it must be complemented by sound corporate governance, effective risk management, regulatory compliance and robust supervision to ensure lasting financial system stability.

According to him, more than 98 per cent of depositors, representing over 281 million accounts across insured financial institutions, are fully covered under the NDIC’s deposit insurance scheme.