The Nigeria Deposit Insurance Corporation (NDIC) has commenced the payment process for depositors affected by the closure of Heritage Bank following the revocation of its banking license by the Central Bank of Nigeria (CBN) on June 3, 2024. This action was taken due to the bank’s ongoing financial instability and repeated regulatory breaches.
In an unprecedented move, the NDIC has started disbursing funds to depositors with balances exceeding N5 million, marking a significant shift in how deposit guarantees are managed in Nigeria. The Corporation, which was appointed as the liquidator for Heritage Bank, began this process within four days of the bank’s closure, highlighting its commitment to prompt customer reimbursement.
Fast-Track Payments and New Liquidation Strategies
The NDIC’s quick action in paying out insured deposits up to N5 million per depositor is a notable achievement. By utilizing Bank Verification Numbers (BVNs) as unique identifiers, the NDIC efficiently located depositors’ alternate accounts in other banks, allowing for seamless payments. This method has already facilitated the disbursement of about 82.36% of the total insured deposits, reducing the need for depositors to physically visit NDIC offices or fill out forms.
However, not all depositors have been fully reimbursed. The remaining 17.64% of insured deposits are pending due to various factors. These include accounts with post-no-debit instructions, lack of BVNs, and accounts without alternative bank arrangements or those with Know Your Customer (KYC) limits that prevent further transactions.
For those with deposits exceeding the N5 million insured threshold, the NDIC has assured that the remaining balances, categorized as uninsured deposits, will be paid out as liquidation dividends. These payments will be made once the defunct bank’s assets are realized and debts owed to Heritage Bank are recovered. This phased approach to repayment underscores the complexity of the liquidation process and the NDIC’s strategic management of it.
The Road Ahead for Affected Depositors
The NDIC’s efforts to manage the fallout from Heritage Bank’s closure reflect a broader strategy to maintain stability in Nigeria’s financial system. The use of BVNs for direct payments marks a significant advancement in the country’s banking infrastructure, reducing bureaucratic hurdles and speeding up the payout process.
Nevertheless, the situation for depositors with large balances remains uncertain, as the full repayment depends on the successful liquidation of the bank’s assets. The NDIC’s statement reassures depositors that they are actively working to maximize asset recovery, which will, in turn, determine the extent and timing of further payments.
As the process unfolds, the NDIC continues to advocate for depositors who have yet to receive their insured amounts. The Corporation is encouraging these customers to complete the necessary verifications and, where needed, resolve KYC-related issues to facilitate their payments.
The closure of Heritage Bank and the subsequent actions by the NDIC highlight the importance of regulatory oversight in Nigeria’s banking sector. It also emphasizes the need for banks to adhere strictly to financial regulations to prevent such drastic measures.
Source: Punch
