Managing Director and Chief Executive of the Nigeria Deposit Insurance Corporation (NDIC), Mr. Hassan Bello, has said that the corporation has been instrumental in promoting financial system stability by ensuring that when banks fail, depositors are protected, and their funds are reimbursed promptly. Bello stated this at the Financial Correspondents Association of Nigeria (FICAN) workshop which held recently in Lagos.
In a keynote address at the FICAN workshop which was sponsored by the NDIC, Hassan said the recent closure of Heritage Bank Limited, following the revocation of its licence by the Central Bank of Nigeria (CBN) on June 3, 2024, underscores the NDIC’s critical role in safeguarding depositors. According to him, 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. He stated that “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 visit the NDIC offices. This innovative approach has indeed enabled the payment of 84.98 per cent of depositors with BVN linked accounts to date. 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 noted, is consistent with the provisions of the International Association of Deposit Insurers (IADI) Core Principle 15, which emphasises timely payouts to depositors of failed banks.
Additionally, Hassan said, the NDIC’s responsibilities extend to the creditors of the defunct bank, who will receive payments after all depositors have been fully reimbursed. According to him, 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”, he said.