Barely five months after the June 3, 2024 revocation of t he license of Heritage Bank Limited, the Nigeria Deposit Insurance Corporation (NDIC), on Thursday it has so far paid the insured deposits of a record 84.98% of its depositors.
This, according to Bello Hassan, Managing Director/Chief Executive of the corporation, “was achieved using Bank Verification Numbers (which served) as a unique identifier to locate depositors’ alternate accounts.”
According to Hassan in a keynote speech delivered at the opening of the NDIC Workshop for Business Editors and the Finance Correspondents Association of Nigeria (FICAN), with the theme: “Strengthening Nigeria’s
Financial Safety-Net – The Role of Deposit Insurance,” the reimbursement was in the discharge of NDIC’s critical role in the banking sector.
Specifically, he said the corporation began the payment of the insured deposits of N5m maximum per depositor within a record four days after the
bank’s closure, underscoring its critical role in safeguarding depositors in accordance with the relevant provisions of the Banks and Other Financial Institutions Act (BOFIA) 2020 and the NDIC Act 2023.
Unlike in other banks, he explained that depositors of Heritage Bank did not need to fill forms or visits the NDIC offices, even as the prompt payment came at a time when the corporation recently raised the deposit insurance coverage from N500,000 to N5m in Deposit Money Banks.
This, he believes, “significantly cushioned the negative impact of bank failure, especially during the current challenging economic climate.
“This achievement 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,” he stressed.
Following the successful reimbursement of insured deposits to a significant proportion of the depositors, Hassan restated the corporation’s commitment “to ensuring that depositors with balances exceeding N5m are also paid the balance of their deposits.”
These uninsured deposits, he continued, “represent a significant portion of the total deposits in Heritage Bank. In this regard, the Corporation is already working assiduously to ensure that, all depositors with amounts in excess of the maximum insured amount of N5m are paid through liquidation dividends from the realisation of the defunct bank’s assets and recovery of debts.
“The corporation 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,” the NDIC boss stressed further.
After all depositors have been fully reimbursed, he said the NDIC as part of its responsibilities would extend its gaze to creditors of the defunct bank, who will receive payments, based on asset realisation and priority of claims, which is aimed essential at maintaining public trust in the banking system and promoting financial stability.
For him also, “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 also noted the importance of confidence “in the maintenance of financial system stability and the role of deposit insurance cannot be overemphasized. As one of the safety-nets, it reassures depositors, thereby instilling trust in the banking system and prevents bank runs during times of uncertainty. Over the years, the NDIC has been instrumental in promoting stability by ensuring that when banks fail, depositors are protected, and their funds are reimbursed promptly,” he hinted.
