The Nigeria Deposit Insurance Corporation (NDIC) has successfully paid 82.36% of the total insured deposits to customers of the now-defunct Heritage Bank, following the revocation of the bank’s license by the Central Bank of Nigeria (CBN) on June 3, 2024.
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.
The statement read: “In the discharge of its deposit guarantee mandate, the Corporation began the payment of the insured deposits of Five Million Naira (N5,000,000) maximum per depositor within a record time of four (4) days of the bank closure.
“This was achieved using Bank Verification Numbers (BVN) as a unique identifier to locate depositors’ alternate accounts in other banks. However, depositors with balances exceeding Five Million Naira have been paid the initial insured sum of Five Million Naira, while the remaining balances (classified as uninsured deposits) will be paid as liquidation dividends upon realization of the defunct bank’s assets and recovery of debts owed to the defunct bank.
“This unprecedented achievement of direct payment through BVN-linked alternate accounts without the need for depositors to visit NDIC offices or fill out forms marks a historic shift for the NDIC in the prompt reimbursement of depositors with payment of about 82.36% of the total insured deposit to date.”
PND instructions hamper 17.64% of insured deposits
While the NDIC has made considerable progress, with over 82% of insured deposits already disbursed, the remaining 17.64% is pending due to issues such as Post No Debit (PND) instructions, the absence of BVN, or the lack of alternative bank accounts. Efforts are underway to contact these depositors and complete the verification process.
The statement noted: “It is instructive to state that, the remaining 17.64% of the insured deposits yet to be paid were largely depositors whose accounts have post no debits (PND) instructions or have no BVN. Others are those with no alternative accounts in other banks or accounts with a KYC limit on the maximum lodgment per day and are yet to come forward for verification.
“These category of depositors are presently being contacted by the Corporation through telephone calls and text messages to come forward for verification.”
For those with deposits exceeding the insured limit of N5 million, the NDIC said it is working diligently to recover and liquidate the bank’s assets, with plans to pay these uninsured amounts as liquidation dividends in due course.
The NDIC assured that the remaining balances, categorized as uninsured deposits, will be paid through liquidation dividends once the assets of the defunct bank are realized and outstanding debts are recovered.
The statement noted: “The Corporation has already initiated the process of debt recovery and realisation of investments and physical assets of the defunct bank to ensure timely reimbursement of the uninsured depositors of the defunct bank.
“Subsequently, after the full payment of both insured and uninsured portion of deposits, the Corporation will proceed with the payment of creditors in accordance with priority of claim as provided in the extant law. We will like to reiterate that, all payments other than that of insured deposits, are subject to availability and realisation of assets of the bank in the form of liquidation dividend.”
The Central Bank of Nigeria (CBN) recently revoked the banking licence of Heritage Bank Plc with immediate effect, citing the bank’s persistent financial instability and breach of regulatory requirements.
The decision is 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.
The CBN also emphasized that the action is crucial to reinforce public confidence in the Nigerian banking sector and to ensure the integrity and soundness of the financial system.