Debt recovery agents working with the Nigeria Deposit Insurance Corporation (NDIC) have identified secrecy, insider collusion, and weak loan documentation as major obstacles to recovering debts from failed financial institutions.
The agents spoke on Thursday in Abuja during the NDIC Sensitisation Seminar for the Corporation’s Debt Recovery Agents.
The NDIC currently manages assets of more than 600 failed financial institutions, including commercial banks, microfinance banks, and other deposit-taking entities.
What they are saying
Mr Augustine Ukauzo, an NDIC agent with Consecrated Law Firm, said poor due diligence by officials of defunct banks has made debt recovery increasingly difficult.
According to him, some bank officials approved loans based on personal relationships or familiarity rather than proper credit assessment, leaving little or no documentation to trace borrowers.
- “Bank officials can connive and give a loan of N100 million to someone (company) for a business without the person or company owning a commiserate asset of that N100 million.
- “There are also some scenarios where bank officials will give loans without a concrete documentation on how to locate the debtor.
- “If the bank officials do what they are supposed to do, banks will not fail,” he said.
Ukauzo added that the seminar would expose agents to new provisions and improvements under the NDIC Act 2023 to strengthen recovery efforts.
Another agent, Dr Abdullahi Tahir, urged banks and regulators to make the Bank Verification Number (BVN) mandatory for loan approvals to improve accountability.
- “What these debtors usually do is that they have lots of companies, and in law, a company is different from the person.
- “If my company takes a loan, if they are going after that loan, they are going after my company and not me as a person. They now extend it to have several companies such that once they take a loan with a company, and that company is compromised, they just move on to the next one,” he said.
He argued that linking BVN to corporate accounts would help trace borrowers across multiple entities.
- “If you go to a bank to open an account, even for a corporate account, you have to drop your BVN and that BVN is linked to your corporate account.
- “Once your BVN is on company A, it will definitely be in company Z.
- “If you are able to use the BVN to tie him down, even if company ABC takes a loan, you can freeze company XYZ and that will put pressure on the company to pay his debts,” he said.
Tahir, however, noted that such measures would need to consider human rights implications.
Backstory
Last month, the NDIC declared a second liquidation dividend of N24.3 billion to depositors of the defunct Heritage Bank Limited whose balances exceeded the insured limit of N5 million at the time of closure.
The payout followed the revocation of the bank’s licence by the Central Bank of Nigeria (CBN) on June 3, 2024, after which the NDIC was appointed as liquidator under the Banks and Other Financial Institutions Act (BOFIA) 2020 and the NDIC Act 2023.
In December 2025, the NDIC also began liquidation processes for ASO Savings and Loans Plc and Union Homes Savings and Loans Plc after the CBN revoked their operating licences.
More insights
Olufemi Kushimo, Director of the Legal Department at NDIC, said the seminar aimed to educate agents on the expanded powers granted under the NDIC Act 2023.
He described the Act as a comprehensive recovery tool designed to enhance the corporation’s capacity to recover debts and fulfil its mandate of guaranteeing deposits and paying uninsured balances to depositors.
Mrs Patricia Okosun, Director of the Asset Management Department, said frequent litigation has also slowed recovery efforts.
- “For instance, we talk about foreclosing an asset.
- “If we have collateral, even when he runs to the courts, we still have some powers that we can foreclose those collaterals especially the ones that have legal mortgage on them,” she said.
What you should know
NDIC Managing Director, Thompson Sunday, recently stated that the NDIC Act No. 30 of 2023 has significantly strengthened the corporation’s authority in liquidation and bank resolution processes.
According to him, the updated legal framework, alongside BOFIA 2020, empowers the NDIC to pursue and prosecute parties found responsible for bank failures, while improving asset recovery mechanisms.
