The Nigeria Deposit Insurance Corporation (NDIC) has reassured customers of the defunct Heritage Bank that their funds are secure despite the bank’s closure earlier this year.
Speaking at the 2024 NDIC Editors Forum in Lagos on Saturday, the corporation’s Managing Director and Chief Executive Officer, Bello Hassan, represented by Executive Director of Operations Mustapha Ibrahim, emphasized NDIC’s role in safeguarding depositors during bank failures.
Hassan explained that the NDIC swiftly began reimbursing insured deposits following the revocation of Heritage Bank’s license by the Central Bank of Nigeria (CBN) on June 3, 2024. Payments of insured deposits, capped at ₦5 million per depositor, commenced just four days after the bank’s closure, utilizing Bank Verification Numbers (BVNs) to identify depositors’ alternate accounts in other banks.
“This innovative approach eliminated the need for depositors to fill out forms or visit NDIC offices, ensuring a seamless process. Most depositors with BVN-linked accounts have already been paid,” Hassan stated.
Expanded Deposit Coverage
In a move to mitigate the impact of bank failures, NDIC recently increased deposit insurance coverage from ₦500,000 to ₦5 million for Deposit Money Banks. This change aligns with international best practices, particularly Core Principle 15 of the International Association of Deposit Insurers, which advocates for prompt payouts to depositors of failed banks.
Hassan also highlighted NDIC’s commitment to reimbursing depositors with uninsured balances exceeding the ₦5 million cap. Efforts are underway to recover Heritage Bank’s debts and liquidate its physical assets to fund the payment of these remaining balances through liquidation dividends.
Protecting Creditors
The NDIC reassured creditors of the defunct Heritage Bank that they, too, would receive payments after all depositors are fully reimbursed.
The Role of NDIC
The NDIC’s intervention demonstrates its critical role in Nigeria’s financial system. In addition to liquidating Heritage Bank, the NDIC has initiated recovery processes and asset realisations to ensure depositors and creditors are compensated without delay.
The Director of Communication and Public Affairs for the NDIC, Bashir Nuhu, underscored the importance of the forum’s theme, “Strengthening Nigeria’s Financial Safety-Net: The Role of Deposit Insurance.” He noted that the platform allowed participants to better understand the NDIC’s functions and its efforts to bolster confidence in Nigeria’s financial system.
Heritage Bank’s collapse serves as a reminder of the importance of financial oversight, but with NDIC’s swift action, depositors and creditors can rest assured of the safety of their funds and the corporation’s dedication to fulfilling its obligations.
