It is with great pleasure that I welcome you all to the 21st Edition of the NDIC Workshop for Business Editors and the Finance Correspondents Association of Nigeria (FICAN). I am particularly delighted to be among this esteemed group of professionals who have consistently shown an unwavering commitment to educating the public on financial matters, especially the critical role of the Nigeria Deposit Insurance Corporation (NDIC) in ensuring the stability of our financial system. The theme of this year’s workshop: “Strengthening Nigeria’s Financial Safety-Net – The Role of Deposit Insurance,” is timely and highly relevant, especially in the light of the ever-evolving dynamics of the global financial system and its implications for Nigeria. As our financial system continues to evolve and face new challenges, the NDIC remains steadfast in its mission to protect depositors and collaborate with the Central Bank of Nigeria (CBN) in ensuring the stability of the banking sector, which is critical to the growth and development of the economy.
Over the next two days, we will engage in deep discussions on key aspects of Nigeria’s deposit insurance system, its evolution, innovations and future prospects. This workshop is designed to enrich your understanding of the NDIC’s role in maintaining financial stability and protecting depositors, with presentations covering key issues that shape the Corporation’s activities and consumer protection. As you may be aware, the NDIC was established over three decades ago to protect depositors, especially the most vulnerable, and to contribute to the stability of the financial system. Our core mandate includes providing deposit insurance cover to depositors of licensed banks, supervising insured financial institutions, resolving distressed banks, and ensuring orderly resolution in the event of bank failure. Confidence is key in the maintenance of financial system stability and the role of deposit insurance cannot be overemphasised. As one of the safety-nets, it reassures depositors, thereby instilling trust in the banking system and prevents bank runs during times of uncertainty. Over the years, the NDIC has been instrumental in promoting stability by ensuring that when banks fail, depositors are protected, and their funds are reimbursed promptly. The recent closure of Heritage Bank, following the revocation of its license by the CBN on June 3, 2024, underscores the NDIC’s critical role in safeguarding depositors. Acting in accordance with the relevant provisions of the Banks and Other Financial Institutions Act (BOFIA) 2020 and the NDIC Act 2023, the NDIC was appointed liquidator to manage the orderly resolution of the bank and oversee the payment of its depositors and other claimants.
In the discharge of this critical role of depositor reimbursement, the Corporation began the payment of the insured deposits of N5 million maximum per depositor within a record time of four days of the bank’s closure. This was achieved using Bank Verification Numbers (BVN) as a unique identifier to locate depositors’ alternate accounts in other banks without the need to fill forms or visits the NDIC offices. This innovative approach has indeed, enabled the payment of 84.98% of depositors with BVN linked accounts to date. The prompt payment of depositors, coming at a time when the Corporation had also recently increased the deposit insurance coverage from N500,000 to N5 million in Deposit Money Banks, significantly cushioned the negative impact of bank failure, especially during the current challenging economic climate. This achievement is consistent with the provisions of the International Association of Deposit Insurers (IADI) Core Principle 15, which emphasises timely payouts to depositors of failed bank. Having largely reimbursed depositors their insured deposits, the Corporation is committed to ensuring that depositors with balances exceeding N5 million are also paid the balance of their deposits. These uninsured deposits represent a significant portion of the total deposits in Heritage Bank. In this regard, the Corporation is already working assiduously to ensure that, all depositors with amounts in excess of the maximum insured amount of N5 million are paid through liquidation dividends from the realisation of the defunct bank’s assets and recovery of debts. The Corporation has already initiated the process of debt recovery and realisation of investments and physical assets of the defunct bank to ensure timely payment of the uninsured deposits of the defunct bank.
Additionally, the NDIC’s responsibilities extend to the creditors of the defunct bank, who will receive payments after all depositors have been fully reimbursed. This orderly process, based on asset realisation and priority of claims, is essential in maintaining public trust in the banking system and promoting financial stability. The handling of the Heritage Bank liquidation illustrates the broader role of the NDIC in ensuring that even in times of financial disruption, depositors can be rest assured that their funds are protected. Before concluding, I must emphasise the important role of the media and civil society groups, alongside corporate affairs managers of banks, in advocating for the effective implementation of the deposit insurance system. Through your efforts, the achievements of the NDIC have become more visible and better understood, reinforcing the Corporation’s enduring impact in contributing to the stability of the financial system. By working together, we can continue to build a more resilient financial system that protects the interests of all stakeholders. Your dedication to promoting the understanding of the NDIC’s mandate and activities has been pivotal in deepening public trust in Nigeria’s banking system.
As we move forward, I encourage you all to maintain your close engagement with the NDIC and take full advantage of the opportunity to share insights, ask questions, and explore ways to further strengthen one of Nigeria’s financial safety-nets.
