NDIC Begins Payment to Depositors of 46 Defunct Microfinance Banks

Nume Ekeghe

The Nigeria Deposit Insurance Corporation (NDIC) has commenced the payment of insured deposits to customers of the 46 microfinance banks whose operating licences were recently revoked by the Central Bank of Nigeria (CBN) last month. 

Managing Director and Chief Executive of the NDIC, Mr. Thompson Oludare Sunday, disclosed this yesterday, at a retreat for members of the House of Representatives Committee on Insurance and Actuarial Matters in Lagos.

 He said the Corporation moved swiftly to begin reimbursing depositors after the CBN revoked the licences of the affected microfinance banks and appointed the NDIC as provisional liquidator.

 “We are working on those. The CBN revoked the licences, and we were appointed as the provisional liquidator. We have started paying depositors of those banks, and gradually we intend to cover all the insured depositors,” Sunday said.

He explained that beyond paying insured deposits, the NDIC had commenced the recovery of outstanding loans owed to the failed institutions as well as the disposal of their assets to generate funds for the payment of uninsured depositors.

“Our function as liquidator involves the payment of guaranteed sums. Thereafter, we go after those who owe the institutions and have not paid. We also ensure that we sell the available assets and realise their investments towards paying the uninsured portion of the deposits. So, we have started paying the guaranteed deposits. What we are doing now is also realising the assets of those institutions,” he added.

Although Sunday declined to disclose the number of depositors already paid from the 46 failed microfinance banks, he said the Corporation was leveraging the Bank Verification Number (BVN) database in collaboration with the Nigerian Inter-Bank Settlement System (NIBSS) to identify beneficiaries and credit them automatically.

 “So, the more accounts we discover, the more payments we make,” he said.

Providing an update on the liquidation of Heritage Bank, Sunday revealed that approximately 700,000 depositors had already received their insured deposits, while efforts were ongoing to trace other customers whose records could not be matched due to incomplete or outdated information.

He attributed the challenge largely to legacy accounts opened before the introduction of the BVN system and poor customer records inherited from predecessor institutions.

“For the guaranteed sum, we do not need you to come forward before you are paid. Of course, there are challenges in the Nigerian system,” he said.

According to him, Heritage Bank evolved through the acquisition and merger of several financial institutions, including Enterprise Bank, which itself inherited customers from banks such as Spring Bank and Guardian Express.

“There are depositors we have not been able to trace, and this is an opportunity for them to come forward. I am sure many of us did the National Youth Service Corps (NYSC) and may have left some money in an account, but there was no BVN then.

“Even the addresses we had were sometimes things like ‘opposite filling station.’ How do you trace such a person? Once they come forward, and for those we have been able to identify from the institution’s database, we have been paying them,” he stated.

Sunday added that the NDIC would continue to recover outstanding loans and dispose of the failed bank’s assets to generate funds for the payment of liquidation dividends to depositors with balances exceeding the insured limit.

On his part, the Chairman of the House of Representatives Committee on Insurance and Actuarial Matters, Hon. Ahmadu Usman Jaha, stressed that as Nigeria’s banking sector undergoes recapitalisation and rapid technological transformation, strengthening the country’s financial safety net has become increasingly critical.

Jaha said: “The ongoing banking sector recapitalisation programme also presents an opportunity to build stronger, better-capitalised, and more resilient financial institutions capable of supporting Nigeria’s aspiration to become a one-trillion-dollar economy.

“Stronger capital, however, must be complemented by stronger supervision, effective deposit insurance, sound corporate governance, enhanced crisis management arrangements, and improved coordination among members of the financial safety net.”

Jaha noted that while banking sector recapitalisation presents an opportunity to build more resilient financial institutions capable of supporting Nigeria’s ambition of becoming a $1 trillion economy, the rapid expansion of fintech also introduces new risks around cybersecurity, operational resilience, consumer protection and digital fraud, requiring continuous legislative attention and closer collaboration among regulators.