- The Nigeria Deposit Insurance Corporation (NDIC) says creditors of the defunct Heritage Bank will be paid after depositors have been reimbursed
- NDIC said factors like KYC mismatch and unavailable BVN have delayed payment of insured depositors
- It said uninsured depositors would be paid after the liquidation of Heritage Bank’s assets
The Nigeria Deposit Insurance Corporation (NDIC) says creditors of the defunct Heritage Bank will be reimbursed after all depositors have been fully compensated.
Managing Director/CEO of NDIC Bello Hassan stated this during the 2024 NDIC/Editors Forum, which was held in Lagos at the weekend and had the theme ‘Strengthening Nigeria’s Financial Safety-Net: The Role of Deposit Insurance.’
Hassan, represented by NDIC’s Executive Director of Operations, Mallam Mustapha Muhammad Ibrahim, reiterated the corporation’s commitment to orderly asset realisation and prioritisation of claims to uphold public trust in the banking system.
He said, “The corporation has already initiated the process of debt recovery and realisation of investments as well as fiscal assets of the deformed bank to ensure timely payment to the uninsured depositors of the defunct bank.
“Additionally, the corporation’s responsibilities extend to the creditors of the defunct bank as well, who will receive payments after all depositors have been fully reimbursed.
“This orderly process, based on asset realisation and prioritisation of claims, is essential for maintaining public trust in the banking system and promoting financial stability.”
In his welcome address, the Director of Communication and Public Affairs of NDIC, Bashir A. Nuhu, said the forum is an avenue to keep media executives abreast of the activities of the corporation considering the importance of deposit insurance in the banking industry and the economy.
NDIC’s efforts to reimburse depositors
Following Heritage Bank’s licence revocation by the Central Bank of Nigeria (CBN) on June 3, the NDIC assumed the role of the bank’s liquidator, resolving the bank’s affairs and protecting depositors.
The NDIC promptly began reimbursing depositors to the insured deposit limit of N5 million per depositor within four days of the bank’s closure by utilising Bank Verification Numbers (BVN) to identify depositors’ alternate accounts in other banks.
In August, the NDIC said it has paid about 82.36 per cent of the total insured deposits of the defunct bank, while the remaining 17.64 per cent of the insured deposits yet to be paid belonged to depositors whose accounts have post no debits (PND) instructions or have no BVN.
On depositors with amounts in excess of the maximum insured deposit of N5 million, which make up a larger chunk of total deposits of the defunct bank, the NDIC said this category of depositors will be promptly paid through liquidation dividend realised from the bank’s assets and debts totalling N700 billion.
Factors delaying payment of all insured customers
However, the NDIC said it still faces challenges with reimbursing insured depositors, including unresolved cases of depositors unable to access their guaranteed funds, inconsistencies in depositors’ database, absence of BVNs, account restrictions and name mismatches.
At the forum, Hassan assured that it is diligently addressing the challenges to ensure that all eligible depositors are promptly reimbursed.
He urged depositors to adhere to Know Your Customer (KYC) requirements prescribed by the CBN, as compliance would facilitate smoother transactions and expedite reimbursements in the event of bank closures.
He said, “I would like to seize this opportunity to emphasise the importance for depositors to ensure strict compliance with all KYC regulations as prescribed by the Central Bank of Nigeria.
“This will not only promote hitch-free transactions with their banks, but it will also go a long way in ensuring prompt reimbursement in the event of bank closure.”
Heritage Bank: What happens to depositors’ funds when a bank’s licence is revoked? (Explainer)
Meanwhile, TheRadar reported that Nigerians woke up on Monday, June 3, to the news of the revocation of the operating licence of Heritage Bank by the CBN to ensure public confidence in the financial system as the bank’s non-performance is a threat to financial stability.
Following this, TheRadar explained what becomes of depositors’ and shareholders’ funds in the event of a revocation of a bank’s licence.
