NDIC Reaffirms Commitment to Reimbursing Heritage Bank’s Uninsured Depositors, Urges Compliance with KYC

Nume Ekeghe 

The Nigeria Deposit Insurance Corporation (NDIC) has reaffirmed its commitment to reimbursing depositors of the defunct Heritage Bank with balances exceeding the N5 million insurance coverage.

The corporation also called on customers to ensure their Know Your Customer (KYC) is accurate to ensure seamless transactions and prompt repayments in the event of bank closures.

Managing Director/Chief Executive Officer, NDIC, Bello Hassan, reiterated this at the 2024 NDIC-Editors’ Forum in Lagos yesterday.

Hassan, who was represented by the Executive Director, of Corporate Services, Mustapha Muhammed, noted that uninsured deposits represented a significant portion of Heritage Bank’s total deposits.

He said the corporation was actively working to recover debts and liquidate the bank’s assets to enable the reimbursement of these funds.

He 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. In this regard, the corporation is already working assiduously to ensure that depositors with amounts over the maximum insured amount of N5 million are paid through liquidation dividends from the realisation of the defunct bank’s assets and recovery of debts. 

“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 to the uninsured deposits of the defunct bank,” he explained.

Speaking on the challenges delaying reimbursement of some depositors, Hassan highlighted issues such as inconsistencies in depositor’s data, the absence of Bank Verification Numbers (BVNs), and name mismatches.

To address these issues, he urged depositors to ensure strict compliance with KYC regulations.

He stated: “I wish to reiterate that the Corporation is not unaware of the case of some depositors who are yet to access their guaranteed sums. This development is a result of reasons ranging from reconciling inconsistencies in the defunct bank’s depositor’s database to the absence of Bank Verification Numbers (BVN), placement of restrictions on some accounts and in some cases name mismatch.

 “The corporation is working assiduously to resolve these challenges. I encourage depositors to comply with KYC regulations, as this will facilitate prompt reimbursement in the event of bank closures,” Hassan added.

Hassan reiterated NDIC’s commitment to protecting depositors and promoting stability in Nigeria’s banking system. 

“The NDIC was established to protect depositors, especially the uninformed, and contribute to financial system stability. Our role cannot be overemphasised,” he said.

The NDIC’s deposit insurance scheme currently guarantees up to N5million per depositor in Deposit Money Banks.

Hassan noted that the recent increase from N500,000 to N5million had significantly minimise the negative impact of bank failures on affected depositors.

“As one of the financial safety nets, it reassures depositors of the safety of their funds, thereby instilling trust in the banking system and preventing bank runs at times of uncertainty. Over the years, the NDIC has been instrumental in promoting stability by ensuring that when banks fail, depositors are protected, and their funds are reimbursed promptly,” Hassan explained.

He further added: “It is instructive that in the discharge of this critical role of depositor reimbursement, the corporation began the payment of the insured deposits of N5 million 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 out forms or visit the NDIC offices. 

“This innovative approach has enabled the payment of most depositors with BVN-linked accounts to date. This is coming at a time when the corporation had recently increased the deposit insurance coverage from N500,000 to N5 million in Deposit Money Banks, which significantly minimise the negative impact of the bank failure on the affected depositors. This achievement is consistent with the provisions of the International Association of Deposit Insurers (IADI) Core Principle 15, which emphasises timely pay-outs to depositors of failed banks,” he added.