The Nigeria Deposit Insurance Corporation (NDIC) said it has commenced the process of recovering debts from debtors of the recently liquidated Heritage Bank as part of moves to pay uninsured depositors of the bank.
The Managing Director of the NDIC, Alhaji Bello Hassan, stated this on Saturday during the 2024 NDIC Editors Forum held in Lagos.
The forum, themed “Strengthening Nigeria’s Financial Safe33ty-Net: The Role of Deposit Insurance,” focused on enhancing public trust and promoting financial stability.
Aside from paying the depositors who had more than the insured N5 million with the bank before its liquidation, Hassan said the Corporation would also ensure that the creditors of the bank are paid.
“The Corporation has already initiated the process of debt recovery and realization of investments as well as fiscal assets of the deformed bank to ensure timely payment to the uninsured depositors of the defunct bank.
“Additionally, the corporation’s responsibilities extend to the creditors of the defunct bank as well, who will receive payments after all depositors have been fully reimbursed,” he said.
Delay in paying some insured customers
Speaking at the event, Hassan, represented by NDIC Executive Director of Operations, Mr. Mustapha Ibrahim, pointed out that while the Corporation succeeded in paying most of the Bank’s insured depositors within four days after the liquidation, it is facing some challenges in paying some of them.
- According to him, several issues such as lack of Bank Verification Number (BVN) by the depositors, restriction on accounts, and lack of alternate bank accounts, among others have caused the delays in paying those depositors.
- He said the corporation is working seriously to resolve these challenges to ensure that depositors are promptly paid.
“I would like to seize this opportunity to emphasize the importance for depositors to ensure strict compliance with all KYC regulations as prescribed by the Central Bank of Nigeria.
“This will not only promote hitch-free transactions with their banks, but it will also go a long way in ensuring prompt reimbursement in the event of bank closure,” he said.
What you should know
Following the revocation of the Heritage Bank’s licence on June 3, the NDIC announced in August that it had successfully paid 82.36% of the total insured deposits to customers of the Bank.
- In a statement released by Bashir A. Nuhu, Director of Communication & Public Affairs, the NDIC confirmed that it has successfully initiated payments to depositors, with a maximum of N5 million per depositor being disbursed.
- This milestone was achieved within just four days of the bank’s closure, utilizing Bank Verification Numbers (BVN) to locate depositors’ alternative accounts in other banks.
- Recall that the Central Bank of Nigeria (CBN) recently revoked the banking licence of Heritage Bank Plc, citing the bank’s persistent financial instability and breach of regulatory requirements.
- The decision was part of the CBN’s mandate to maintain a sound financial system in Nigeria, as outlined under Section 12 of the Banks and Other Financial Institutions Act (BOFIA) 2020.
- In a statement, the CBN disclosed that Heritage Bank had failed to adhere to Section 12 (1) of BOFIA 2020, which necessitated regulatory intervention.
Despite multiple supervisory measures prescribed by the CBN to mitigate the bank’s declining financial performance, Heritage Bank has been unable to improve its financial health.
The bank’s continuous underperformance poses a significant threat to financial stability, compelling the CBN to revoke its licence.
