NDIC Partners Judiciary to Prosecute Failed Banks

Nigeria Deposit Insurance Corporation (NDIC), has strengthened its partnership with the judiciary aimed at enhancing the prosecution of failed banks, according to Bello Hassan, managing director of the corporation.

Hassan stated this at the ongoing 19th Abuja International Trade Fair with the theme: “Mobility: Options for Transport, Trade Finance, and Taxation,” in Abuja.

He said the NDIC’s swift response in the case exemplifies its critical role in maintaining financial stability and protecting depositors from the impacts of bank failures.

NDIC also reaffirmed its dedication to safeguarding the deposits of Nigerians, especially to the recent closure of Heritage Bank.

Hassan explained that the initiative has allowed the NDIC to successfully compensate 84.98% of depositors with linked accounts, ensuring that insured amounts of up to N5 million were credited without requiring physical visits to NDIC offices.

He said: “The importance of deposit insurance cannot be overstated in a financial system where confidence is essential. It acts as a safety net that reassures depositors, builds trust in the banking system, and helps to prevent bank runs during periods of uncertainty.

“Over the years, the NDIC has been instrumental in promoting stability by ensuring that when banks fail, depositors are promptly compensated.

“The recent closure of Heritage Bank, following the Central Bank of Nigeria’s revocation of its operating licence on June 3, 2024, underscores the crucial role of the NDIC in protecting depositors. In line with the provisions of the Banks and Other Financial Institutions Act (BOFIA) 2020 and the NDIC Act 2023, the NDIC was appointed liquidator to oversee the resolution of the bank and the payment of its depositors.

“In an unprecedented achievement, the NDIC commenced payments to depositors within four days of Heritage Bank’s closure. By leveraging depositors’ Bank Verification Numbers (BVN) as a unique identifier, the Corporation was able to identify alternate accounts and credit the insured amounts of up to N5 million directly, without the need for forms or physical visits to NDIC offices. This innovative approach has enabled the payment of 84.98% of depositors with BVN linked accounts to date.

“This prompt response, alongside the recent increase in deposit insurance coverage from N500,000 to N5 million, has significantly mitigated the impact of the bank’s failure on depositors.

“Significant progress has been made in protecting depositors’ funds, with the recent increase in maximum deposit insurance coverage providing enhanced protection across various financial institutions.

“This increase ensures that 98.98 per cent of total depositors in Deposit Money Banks (DMBs), 99.27 per cent in Microfinance Banks (MFBs), 99.34 per cent in Primary Mortgage Banks (PMBs), and 99.99 per cent  in Payment Service Banks (PSBs) are covered. reinforcing NDIC’s commitment to fulfilling its mandate.

“While our immediate focus remains on insured deposits, the NDIC is also committed to ensuring that depositors with balances exceeding N5 million are compensated. These larger, uninsured deposits, represent a significant portion of the total deposits in Heritage Bank.

“The Corporation has already initiated the process of realising the bank’s assets and recovering debts to ensure the timely payment of the uninsured depositors through liquidation dividends.”

Hassan also urged depositors affected by bank closures to stay informed and submit their claims through official NDIC channels, reinforcing the corporation’s commitment to ensuring that all depositors receive the protections they deserve.

The NDIC’s renewed focus on collaboration with judicial authorities marks a significant step towards enhancing regulatory oversight and promoting a more resilient banking environment in Nigeria.