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🇳🇬 Nigeria /Economy & Trade

NDIC begins payouts to depositors of 46 failed MFBs

From The Punch · () English

Summarized and contextualized by DistantNews.

At a glance

News Official statement Outcome reported
  • The Nigeria Deposit Insurance Corporation (NDIC) has begun paying insured deposits to customers of 46 microfinance banks whose licenses were revoked by the Central Bank of Nigeria.
  • NDIC is also recovering loans and selling assets of these failed banks to reimburse depositors with balances exceeding the insured limit.
  • A new system using Bank Verification Numbers (BVN) allows for automatic payments to depositors, reducing delays, as seen with Heritage Bank customers.

The Nigeria Deposit Insurance Corporation (NDIC) has initiated payouts to depositors of 46 microfinance banks whose operating licenses were revoked by the Central Bank of Nigeria. The corporation is simultaneously intensifying efforts to recover outstanding loans and sell off assets from these defunct institutions to reimburse depositors whose balances exceed the insured limit.

We’ve started paying depositors of those banks, and gradually, we intend to cover all the insured depositors.

— Thompson SundayDisclosing the commencement of payouts to depositors of failed microfinance banks.

Thompson Sunday, the Managing Director and CEO of NDIC, announced that the corporation acted swiftly to begin liquidation proceedings after the CBN revoked the licenses and appointed NDIC as the provisional liquidator. "We’ve started paying depositors of those banks, and gradually, we intend to cover all the insured depositors," Sunday stated. He further explained the dual approach: "Our function as liquidator involves paying the guaranteed sums. Thereafter, we go after those owing the institutions and ensure that available assets are sold to realise funds for settling the uninsured portions of deposits."

NDIC has overhauled its reimbursement process by partnering with the Nigeria Inter-Bank Settlement System (NIBSS). This collaboration enables automatic payments directly to depositors' accounts in other banks via their Bank Verification Number (BVN), significantly reducing claim filing delays. This streamlined approach has accelerated payments for approximately 700,000 customers of Heritage Bank, whose license was revoked earlier.

Our function as liquidator involves paying the guaranteed sums. Thereafter, we go after those owing the institutions and ensure that available assets are sold to realise funds for settling the uninsured portions of deposits.

— Thompson SundayExplaining the NDIC's process for handling failed banks and reimbursing depositors.

However, Sunday noted challenges in tracing some Heritage Bank depositors, as the bank inherited accounts from legacy institutions predating the BVN system. He urged these depositors to come forward for verification and payment. The NDIC chief also stressed that while recent banking sector recapitalization strengthens lenders, it must be coupled with effective supervision, sound corporate governance, and robust risk management to ensure financial stability.

There are depositors that we have not been able to trace, and this is an opportunity for them to come forward. Once they do, we will pay them.

— Thompson SundayAppealing to untraced depositors of Heritage Bank to come forward for their insured funds.
DistantNews Editorial

Originally published by The Punch. Summarized and contextualized by our editorial team with added local perspective. Read our editorial standards.

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