The Managing Director and CEO of the Nigeria Deposit Insurance Corporation (NDIC), Bello Hassan, has assured customers of the recently closed Heritage Bank that their funds remain secure, emphasizing the corporation’s commitment to safeguarding depositors in the event of bank failures. This reassurance was shared at the 2024 NDIC Editors Forum held in Lagos on Saturday.
Represented by NDIC Executive Director (Operations) Mustapha Ibrahim, Hassan highlighted the swift response following Heritage Bank’s closure and the Central Bank of Nigeria’s (CBN) revocation of its license on June 3, 2024. “The recent closure of Heritage Bank underscores NDIC’s critical role in protecting depositors,” he stated. As the designated liquidator, the NDIC has taken charge of an orderly resolution of the bank’s assets and the payment process for its depositors.
“In line with the Banks and Other Financial Institutions Act (BOFIA) 2020 and the NDIC Act 2023, the NDIC commenced insured deposit payments of up to N5 million per depositor within just four days of the bank’s closure,” Ibrahim explained. By leveraging Bank Verification Numbers (BVNs) as unique identifiers, NDIC has been able to locate depositors’ alternate accounts in other banks, allowing for immediate reimbursement without the need for depositors to fill out forms or visit NDIC offices.
This approach, NDIC noted, has enabled the payment of most depositors with BVN-linked accounts, providing a timely financial lifeline for many. NDIC’s recent decision to increase deposit insurance coverage from N500,000 to N5 million in Deposit Money Banks significantly reduced the impact of Heritage Bank’s closure on its customers. According to Hassan, this move aligns with international standards, particularly the International Association of Deposit Insurers Core Principle 15, which prioritizes swift payouts for depositors in cases of bank failure.
For depositors with balances exceeding the insured amount of N5 million, NDIC has promised further reimbursements. “The corporation is actively working to ensure that depositors with balances beyond the insured amount receive payment through liquidation dividends generated from the sale of Heritage Bank’s assets and debt recoveries,” Ibrahim noted. He added that NDIC has already begun asset realisation and debt recovery to ensure these uninsured deposits are reimbursed in a timely manner.
Beyond depositors, NDIC has also reassured Heritage Bank’s creditors, who will be paid following the complete reimbursement of all depositors. “Creditors can rest assured that NDIC is committed to settling all obligations,” the NDIC executive stated.
The decision by the CBN to revoke Heritage Bank’s license and appoint NDIC as the bank’s liquidator was a significant move aimed at protecting the financial system and preventing further financial instability. As the NDIC proceeds with its liquidation responsibilities, the corporation continues to prioritize depositor safety and confidence.
The NDIC Editors Forum, themed “Strengthening Nigeria’s Financial Safety-Net: The Role of Deposit Insurance,” served as a valuable platform for sharing the NDIC’s mandate and recent initiatives. Speaking at the event, NDIC Director of Communication and Public Affairs Bashir Nuhu highlighted the forum’s role in educating participants on the corporation’s efforts to bolster Nigeria’s financial safety net.
With NDIC’s swift response and structured payout plan, the Corporation aims to reassure the Nigerian public of its commitment to financial stability, offering a measure of confidence and clarity to affected depositors and creditors of the defunct Heritage Bank.
