NDIC fast-tracks Heritage Bank reimbursements with BVN-driven methodology
By Esther Agbo
The Nigeria Deposit Insurance Corporation (NDIC) has implemented a streamlined depositor payment process, which has significantly expedited the reimbursement of customers from the now-defunct Heritage Bank.
This was revealed by NDIC’s Managing Director, Bello Hassan, during a retreat for the House of Representatives Committee on Insurance & Actuarial Matters in Lagos.
Following the Central Bank of Nigeria’s (CBN) decision in June to revoke Heritage Bank’s licence, the NDIC was appointed as the liquidator, tasked with ensuring depositors are compensated promptly.
Hassan highlighted that the adoption of an improved payment methodology, leveraging Bank Verification Numbers (BVN) sourced from the Nigeria Inter-Bank Settlement System, allowed the NDIC to access alternative accounts of customers and begin disbursements within just four days, a significant improvement over historical timelines.
Hassan said, “The corporation also recognised the importance of timely reimbursement to depositors in maintaining financial stability.
“In this regard, the corporation had reassessed its depositor payment methodology with a view to adopting a different approach that will ensure prompt payments to depositors.
“This was tested in the recent payment to depositors of Heritage Bank in-liquidation,” Hassan noted.
The NDIC has successfully paid out 86 percent of the total insured deposits of Heritage Bank’s customers.
However, Hassan acknowledged that challenges remain in disbursing the final 14 percent, primarily due to issues such as court-ordered restrictions, KYC limitations, and the absence of BVNs or verified alternative accounts.
“The corporation is making efforts to complete the payments of the remaining 14 percent of the insured deposits.
Some of the insured depositors constituting these remaining 14 percent are customers whose accounts have posted no debit instructions by courts or regulatory authorities.
Others are those with KYC limitations on the maximum lodgment per day, customers with no BVN attached to their accounts or have not come forward for verification to provide alternate accounts in other banks to enable the corporation to pay them.
“Notwithstanding the success recorded in payment of insured sums to depositors of the defunct heritage bank, the corporation is mindful of the uninsured depositors and we have therefore initiated the process of debt recovery and realisation of investments and physical assets of the bank to ensure timely reimbursement of uninsured deposits.
“It is pertinent to remind us here that upon payoff of both insured and uninsured deposits, the corporation will subsequently proceed with the payment of creditors and others in accordance with the priority of claim as provided in the extant law,” Hassan stated.
In addressing uninsured depositors, Hassan emphasised that the NDIC has initiated debt recovery efforts and is working to liquidate the bank’s investments and physical assets to ensure these customers are also compensated.
This process will follow the legal priorities of claim settlement, including payments to creditors.
The CBN cited Heritage Bank’s persistent financial underperformance and its threat to the broader financial system as the reasons behind the licence revocation, noting that despite various regulatory interventions, the bank’s management failed to achieve a sustainable recovery.
The CBN’s decisive action aimed to protect the financial system and maintain public confidence.
