Defunct Heritage Bank: NDIC  to Pay Depositors with Balances Above N5m Threshold

James Emejo in Abuja

The Nigeria Deposit Insurance   Corporation (NDIC) yesterday said it has intensified efforts to ensure timely payments to depositors of the defunct Heritage Bank whose balances exceeded the maximum deposit insurance limit of N5 million.

Following the revocation of the bank’s operating license by the Central Bank of Nigeria (CBN) on June 3, 2024, the NDIC was appointed as the liquidator in accordance with Section 12(2)  of the Banks  and  Other  Financial  Institutions  Act  (BOFIA) 2020 and Section 55(1 & 2) of the NDIC Act 2023. 

The corporation disclosed this in an update on payment of uninsured sums to depositors of Heritage Bank (In-liquidation).

In line with its statutory mandate, the corporation immediately commenced the bank’s liquidation   process,   including the verification and   payment of insured deposits to all depositors.

However, the NDIC noted that significant progress had been made in reimbursing the insured deposits of the N5 million maximum per depositor. 

The clarification came against the backdrop of concerns   raised by depositors about the payments.

The NDIC management, in a statement stated that depositors yet to be paid their insured deposits are largely those without Bank Verification Number (BVN) or alternate accounts in other banks to enable the corporation fetch   the accounts from   the   Nigeria   Inter-Bank   Settlement System (NIBSS) database to effect payment.

Other depositors in this category are those with post no debit (PND) restrictions on their accounts.

Additionally, some  accounts   have Know Your Customer   (KYC) limitations  such   as   Tier 1 accounts that places   restrictions on the maximum lodgment of funds, while others have name   mismatches that require   resolution.   

It pointed out that some depositors who have been paid may also be unaware that they have received payments due to lack of mobile phone transaction alerts on their alternate accounts into which the insured sums were paid by the NDIC. 

It advised depositors to check their alternate bank accounts,  as  some  payments may have  been  processed without their immediate awareness.

Further on the commencement of payment to uninsured depositors, the NDIC said while   depositors with balances   above N5 million have been   paid the  initial insured sums of the amount, the remaining balance in excess of the insured sum of the N5 million already reimbursed, will be paid as liquidation dividends in accordance with the   corporation’s statutory   mandate.   

The statement added that the corporation had made substantial progress in disposing the physical assets as well as recovering some of the debts of the failed bank to   ensure that depositors with   balances above the maximum insured limit receive their payments as soon as possible. 

The NDIC said, “As a clear demonstration of this commitment, the corporation commenced the realisation of physical assets and   investments as well as   aggressive recovery of the   risk assets, concurrently with   the verification and payment   of insured sums. 

“To ensure transparency and   compliance with legal   requirements,  the NDIC has widely advertised the asset disposal process on its official website, social media platforms,  and  major   national newspapers, as well   as through radio and television announcements.

“The corporation’s approach of simultaneously paying insured depositors while aggressively pursuing asset sales and debt recovery is designed to accelerate the liquidation process and ensure that all depositors receive their funds without unnecessary delays.”

It added, “With the   considerable progress   recorded in the asset realisation, the corporation will declare the first tranche of liquidation dividends in April 2025 which will be paid to uninsured depositors on a pro-rata basis, in line with Section 72 of the NDIC Act 2023 on the priority of claims.

“For clarity, the referenced section states that: ‘Where an insured institution is unable to meet its obligations or suspends payment, or where its management and control have been taken over by the Central Bank of Nigeria following the revocation of its license, the assets of the insured institution shall be available to meet its deposit liabilities. Such deposit liabilities shall have priority over all other liabilities of the insured institution’.

“Consequently, other claimants of the failed Heritage Bank,   including   creditors,   and   shareholders, will be   considered for payment of   liquidation dividends only   after all depositors have been   fully reimbursed.

“The NDIC wishes to reiterate its commitment to the safety of depositors’ funds in all licensed banks.” 

The NDIC however, urged the public to continue their banking activities without fear, as all other banks remain safe and sound.

It encouraged affected depositors with further enquiries to contact the Claims Resolution Department of the NDIC for more clarification.