The Nigeria Deposit Insurance Corporation (NDIC) has begun compensating depositors of the defunct Heritage Bank with a maximum payout of N5 million per depositor. This development follows the revocation of Heritage Bank’s license by the Central Bank of Nigeria (CBN) in June, leading to the bank’s closure.
The NDIC, acting as the liquidator for Heritage Bank, is utilizing Bank Verification Numbers (BVN) as a unique identifier to locate and pay depositors through their alternate accounts in other banks. This innovative approach has significantly expedited the payment process, allowing the NDIC to begin disbursements within just four days of the bank’s closure.
Heritage Bank’s license was revoked by the CBN due to regulatory and financial issues, necessitating the intervention of the NDIC. The NDIC, in line with its mandate to protect depositors and ensure the stability of the financial system, swiftly moved to secure the insured deposits of the bank’s customers. Under the NDIC’s deposit insurance scheme, each depositor is guaranteed a maximum payout of N5 million.
In an unprecedented move, the NDIC leveraged the BVN system to directly pay depositors without requiring them to visit NDIC offices or fill out lengthy forms. This method not only simplifies the payment process but also ensures that depositors receive their funds quickly and securely. To date, about 82.36% of the total insured deposits have been successfully paid out using this method.
However, there are still some depositors who have yet to receive their payments. These include those whose accounts have “post no debits” (PND) instructions, those without BVNs, or those who lack alternative accounts in other banks. The NDIC is actively reaching out to these depositors through phone calls and text messages, urging them to complete the verification process to receive their funds.
For depositors with balances exceeding the N5 million insured limit, the NDIC has already disbursed the initial insured amount. The remaining balances, classified as uninsured deposits, will be paid as liquidation dividends. These payments will be made once the NDIC has realized the assets and recovered the debts owed to the defunct bank.
The NDIC has initiated the process of asset realization, which includes the recovery of loans and the sale of physical assets owned by Heritage Bank. The proceeds from these activities will be used to pay the uninsured depositors as well as other creditors, in line with the priority of claims outlined in the law.
The NDIC’s swift response and use of BVN technology underscore its commitment to safeguarding depositors’ funds in Nigerian banks. The corporation reassures the public that all licensed banks, apart from the now-defunct Heritage Bank, remain safe and sound. Customers are encouraged to continue their banking activities without fear, as the NDIC continues to monitor and protect the stability of the banking sector.
This proactive approach by the NDIC not only provides reassurance to depositors but also sets a new standard for the prompt and efficient reimbursement of insured deposits in the event of a bank failure. The NDIC’s use of BVN-linked payments represents a significant advancement in how deposit insurance claims are handled in Nigeria, offering a quicker and more reliable method of protecting depositors’ interests.
