NDIC to Recover N400bn Debts Owed Failed Banks

•Hassan: Over N1.6bn paid to 40,000 depositors 

•Backs proposed banking industry recapitalisation

Abiodun Eromosele, James Emejo and Nume Ekeghe in Owerri

The Managing Director/Chief Executive, Nigeria Deposit Insurance Corporation (NDIC), Mr. Bello Hassan, yesterday said the corporation was prepared to wield the big stick in its ongoing efforts to recover over N400 billion owed by debtors of failed banks which are now in liquidation.

He said debt recovery remained one of the greatest challenges hampering its deposit insurance operation.

He spoke to journalists at the opening of the 20th workshop for business editors and finance correspondents, with the theme: “Stocktaking of Deposit Insurance Practice: Assessing the Now, Evaluating the Challenges and Forecasting the Future” in Owerri, Imo State.

Hassan said the NDIC will leverage a bouquet of powers in its disposal, courtesy of the revised NDIC Act, 2023 to expedite the process of debt recovery, moving forward.

He said the non-recovery of debts was obstructing the smooth payment of many depositors of failed banks.

He said: “A lot of customers of banks in liquidation that borrowed are not willing to repay those debts. And I want to put it on record that those debts or those loans that were granted were granted out of deposits of people that were collected by the banks.

“So, it is only when those debtors pay back that the NDIC would now be able to pay the depositors of those failed banks. And that is one of the greatest challenges that we’re facing.

“Luckily enough, there is a review in the 2023 NDIC Act, a lot of powers have been given to the corporation in order to expedite this process. We are hoping to leverage that to ensure that we recover more so that we can pay those depositors.”

The NDIC boss, who put the total debt owed to institutions in liquidation at over N400 billion, including Deposit Money Banks (DMBs), Microfinance Banks (MFBs), and Primary Mortgage Institutions (PMIs), however pointed out that a substantial recovery had been made, while affected depositors had also been paid accordingly.

He added that substantial payments of the insured amounts had also been paid to depositors of banks whose licences were recently revoked earlier in May by the Central Bank of Nigeria (CBN).

Specifically, Hassan said over N1.6 billion had been disbursed to 40,000 depositors while further calling on other depositors who didn’t have a Bank Verification Number (BVN) attached to their bank accounts to come forward and be verified in order to access their insured deposits.

Commenting on the CBN’s proposed drive to recapitalise the banking industry, the NDIC MD said the move was inevitable in order to enable the banks to play adequately in the proposed $1 trillion- economy currently envisaged by the President Bola Tinubu administration.

He said: “You also need bigger banks to be able to play within that space.  As the government is implementing the agenda of growing the Gross Domestic Product (GDP) to beyond $1 trillion.

“You need bigger banks to be able to play in that space and I believe it is within that context that the CBN is looking at recapitalising banks. So, we await the CBN for further details on this recapitalisation process.”

Earlier in his opening remarks, Hassan said the corporation had introduced the Single Customer View (SCV) framework that has enhanced speedy payment of insured sums to depositors of closed banks.

Among other things, he said the corporation had also enhanced collaboration with the bar and the bench, leading to speedy dispensation of justice and more informed judgements on failed banks cases.

In addition , he stressed that the NDIC has put in place policy and framework on Alternative Dispute Resolution for out-of-court settlement, which had enabled it to resolve some hitherto protracted failed bank litigations.

He said: “We have reviewed the Framework for Differential Premium Assessment System (DPAS) to make it more risk sensitive and account for significant developments that have taken place in the Nigerian banking system since its adoption in 2008.”

 He said in complementing the consumer protection efforts of the CBN, the corporation has enhanced public awareness on the benefits and limitations of the deposit insurance system and financial literacy to reduce the rate at which small depositors are being defrauded, thereby enhancing confidence in the banking system.

Hassan said: “We have invigorated our liquidation activities, and greatly increased debt recovery rate leading to declaration of 100 per cent liquidation dividends to depositors of over 20 deposit money banks in- liquidation.

“We have also improved our systems, processes and procedures to promote transparency and accountability in our operations, amongst other humble achievements.”