BVN Enabled Us in Timely Payment of 85 Percent of Heritage Bank Depositors — NDIC

Mr Bello Hassan, managing director/CEO, Nigeria Deposit Insurance Corporation (NDIC), has said that the use of Bank Verification Numbers (BVN) facilitated the successful reimbursement of 84.98 per cent of depositors from the defunct Heritage Bank.

Hassan made this announcement during the 21st edition of the NDIC Workshop for Business Editors and the Finance Correspondents Association of Nigeria (FICAN), held in Lagos.

The workshop, themed “Strengthening Nigeria’s Financial Safety-Net – The Role of Deposit Insurance,” was described as timely and pertinent, considering the rapidly changing dynamics of the global financial system and its impact on Nigeria.

He emphasized that the recent revocation of Heritage Bank’s license by the Central Bank of Nigeria (CBN) on June 3, 2024, serves as a clear demonstration of the NDIC’s critical role in protecting depositors and maintaining financial stability in the banking sector.

According to him, acting under 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 said in the discharge of this critical role of depositor reimbursement, the Corporation began the payment of the insured deposits of N5m 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 out forms or visit the NDIC offices.

“This innovative approach has indeed, enabled the payment of 84.98% 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 N5m in Deposit Money Banks, 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 banks,” he said.

Hassan said that having largely reimbursed depositors their insured deposits, the Corporation is committed to ensuring that depositors with balances exceeding N5m are also paid the balance of their deposits.

He stated that the uninsured deposits represent a significant portion of the total deposits in Heritage Bank.

According to him, in this regard, the Corporation is already working assiduously to ensure that, all depositors with amounts above 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.

“Additionally, the NDIC’s responsibilities extend to the creditors of the defunct bank, who will receive payments after all depositors have been fully reimbursed.

“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.

Hassan assured that as the Nigerian financial system continues to evolve and face new challenges, the NDIC remains steadfast in its mission to protect depositors and collaborate with the Central Bank of Nigeria (CBN) in ensuring the stability of the banking sector, which is critical to the growth and development of the economy.

He noted that confidence is key 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 preventing 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 said.