Bello Hassan, the Managing Director of the Nigeria Deposit Insurance Corporation (NDIC), has stated that the adoption of an enhanced depositor payment methodology enabled the timely reimbursement of depositors from the defunct Heritage Bank.

 

Hassan made this remark on Tuesday during his welcome address at a retreat for members of the House of Representatives Committee on Insurance & Actuarial Matters in Lagos.

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In June, the Central Bank of Nigeria (CBN) revoked Heritage Bank’s license and appointed the NDIC as the liquidator.

Hassan explained, “The corporation recognized the importance of timely reimbursement to depositors in maintaining financial stability. In this regard, we reassessed our depositor payment methodology to adopt a new approach that ensures prompt payments to depositors.

This was successfully tested in the recent payment to depositors of Heritage Bank in liquidation.”

He noted that by utilizing the Bank Verification Numbers (BVN) of depositors, obtained through the Nigeria Inter-Bank Settlement System, the NDIC was able to access alternative accounts of customers and commence payments within a record time of four days.

This marked a significant improvement compared to previous practices, which usually took much longer.

Hassan added that, cumulatively, the NDIC had paid out 86% of the total insured deposits.

“The corporation is working to complete the payments for the remaining 14% of insured deposits. The depositors in this remaining 14% include those with court or regulatory holds on their accounts, customers with Know Your Customer (KYC) limitations on daily deposits, and those without BVNs linked to their accounts or who have not come forward for verification to provide alternate accounts in other banks,” he explained.

Despite the success in paying out insured deposits, Hassan emphasized the NDIC’s commitment to uninsured depositors. He stated that the NDIC has initiated the process of debt recovery and the realization of investments and physical assets of Heritage Bank to ensure timely reimbursement of uninsured deposits.

Once both insured and uninsured deposits are paid off, the corporation will proceed with payments to creditors and other claimants according to the priority of claims outlined by law.

The CBN explained that Heritage Bank’s license was revoked due to its inability to improve its financial performance, which posed a threat to financial stability.

Despite various supervisory measures taken by the regulator, the bank’s management was unable to reverse its decline. Consequently, the CBN acted to protect the financial system and maintain public confidence