NDIC To Reimburse Depositors Of Heritage Bank Whose Deposits Exceed N5m
By Sunday Etuka, Lagos
The Managing Director and Chief Executive of the Nigeria Deposit Insurance Corporation (NDIC) has assured of the Corporation’s commitment to reimbursing uninsured depositors of the defunct Heritage Bank with deposits in excess of the maximum insured amount of N5 million.
Mr. Hassan gave the assurance on Thursday at the going 21st Edition of the NDIC Workshop for Business Editors and the Finance Correspondents Association of Nigeria (FICAN) in Lagos, with the theme: “Strengthening Nigeria’s Financial Safety-Net – The Role of Deposit Insurance.”
The workshop was designed to enrich the Journalists’ understanding of the NDIC’s role in maintaining financial stability and protecting depositors, with presentations covering key issues that shape the Corporation’s activities and consumer protection.
Speaking, the NDIC boss said, “having largely reimbursed depositors their insured deposits, the Corporation is committed to ensuring that depositors with balances exceeding N5 million are also paid the balance of their deposits.
“These uninsured deposits represent a significant portion of the total deposits in Heritage Bank”, he said.
The MD disclosed that the amount would be paid through liquidation dividends from the realisation of the defunct bank’s assets and recovery of debts, disclosing that the Corporation has already initiated the process of debt recovery and realisation of investments and physical assets of the defunct bank to ensure timely payment of the uninsured deposits of the defunct bank.
He said, the Corporation’s responsibilities also extend to the creditors of the defunct bank, who will receive payments after all depositors have been fully reimbursed, noting that the orderly process, based on asset realisation and priority of claims, was essential in maintaining public trust in the banking system and promoting financial stability.
According to him, the handling of the Heritage Bank liquidation illustrated the broader role of the NDIC in ensuring that even in times of financial disruption, depositors can be rest assured that their funds are protected.
He informed that in the case of Heritage Bank, “the Corporation began the payment of the insured deposits of N5 million maximum per depositor within a record time of four days of the bank’s closure.
“This was achieved using Bank Verification Numbers (BVN) as a unique identifier to locate depositors’ alternate accounts in other banks without the need to fill forms or visits the NDIC offices.
“This innovative approach has indeed, enabled the payment of 84.98% of depositors with BVN linked accounts to date”, he said.
Mr. Hassan continued that “The prompt payment of depositors, coming at a time when the Corporation had also recently increased the deposit insurance coverage from N500,000 to N5 million in Deposit Money Banks, significantly cushioned the negative impact of bank failure, especially during the current challenging economic climate.
“This achievement is consistent with the provisions of the International Association of Deposit Insurers (IADI) Core Principle 15, which emphasises timely payouts to depositors of failed bank”, he said.
While stating that the Corporation
was established over three decades ago to protect depositors, especially the most vulnerable, and to contribute to the stability of the financial system, Mr. Hassan said, its core mandate includes providing deposit insurance cover to depositors of licensed banks, supervising insured financial institutions, resolving distressed banks, and ensuring orderly resolution in the event of bank failure.
