NDIC uses BVN to pay Heritage Bank customers
The Nigeria Deposit Insurance Corporation (NDIC) has initiated the payment of a maximum of N5 million per depositor to customers of the now-defunct Heritage Bank. This remarkable initiative follows the revocation of Heritage Bank’s license by the Central Bank of Nigeria (CBN) in June. The NDIC, appointed as the liquidator, has leveraged BVN to streamline the identification and reimbursement process, marking a historic shift in deposit insurance practices.
Efficient and Swift Payouts
In a record-setting response, the NDIC began disbursing insured deposits within just four days of the bank’s closure. Using BVN as a unique identifier, the corporation efficiently located depositors’ alternate accounts in other banks, thus eliminating the need for depositors to physically visit NDIC offices or complete cumbersome paperwork. This method has facilitated the swift payment of approximately 82.36 percent of the total insured deposits to date.
Addressing Larger Balances
For depositors with balances exceeding N5 million, the NDIC has paid the initial insured amount of N5 million. The remaining balances, categorized as uninsured deposits, will be settled as liquidation dividends once the defunct bank’s assets are realized and its debts recovered. This ensures that even those with larger deposits will eventually receive their full entitled amounts.
Ongoing Efforts for Full Reimbursement
While the NDIC has achieved significant progress, 17.64 percent of insured deposits remain unpaid. These include accounts with post-no-debits (PND) instructions, accounts lacking BVN, and those without alternative accounts or with Know Your Customer (KYC) limits on daily lodgments. The NDIC is actively contacting these depositors through phone calls and text messages to complete the verification process.
Ensuring the Safety of Depositors’ Funds
The NDIC’s approach underscores its commitment to safeguarding depositors’ funds across all licensed banks. Following the full payment of both insured and uninsured deposits, the NDIC will proceed with the payment of creditors in accordance with the priority of claims as stipulated by law.
Reassuring the Public
The NDIC reassures the public that all other banks remain safe and sound. The swift and efficient handling of Heritage Bank’s closure serves as a testament to the robustness of Nigeria’s financial safety nets. The corporation urges the public to continue their banking activities with confidence, emphasizing the security and stability of the banking sector.
Detailed Overview of the NDIC’s Actions and Impact
Heritage Bank’s License Revocation and Immediate Response
The CBN’s revocation of Heritage Bank’s license in June set in motion a series of rapid responses by the NDIC. Appointed as the liquidator, the NDIC moved swiftly to address the needs of depositors, implementing a streamlined process for verifying and paying out insured deposits. This proactive approach highlights the NDIC’s dedication to protecting depositor interests and maintaining confidence in the financial system.
Leveraging Technology for Efficiency
The use of BVN as a unique identifier exemplifies how technology can enhance efficiency in financial operations. By linking depositors to their alternate accounts in other banks, the NDIC was able to bypass traditional bureaucratic hurdles, ensuring that payments were made promptly and accurately. This technological integration not only expedited the process but also set a new standard for future deposit insurance operations.
Addressing the Needs of All Depositors
For depositors with balances exceeding the N5 million insured limit, the NDIC has provided clear guidelines on the payment of the remaining balances. These balances, classified as uninsured deposits, will be paid as liquidation dividends following the realization of the defunct bank’s assets. This process ensures that all depositors, regardless of the size of their deposits, will receive their due funds.
Challenges and Solutions
Despite the significant progress made, challenges remain. The NDIC continues to work on resolving issues related to accounts with PND instructions, accounts without BVN, and those with KYC limits. By actively reaching out to these depositors, the NDIC aims to ensure that no eligible depositor is left without their insured funds.
A Commitment to Financial Stability
The NDIC’s actions reflect its broader mandate to ensure the safety and stability of Nigeria’s banking system. By promptly addressing the fallout from Heritage Bank’s closure, the NDIC has reinforced public confidence in the financial sector. This commitment to depositor protection and financial stability is crucial in maintaining the integrity of the banking system.
The NDIC’s innovative use of BVN to facilitate the payment of deposits to Heritage Bank customers marks a significant milestone in Nigeria’s financial sector. This efficient and swift response underscores the NDIC’s commitment to protecting depositors and maintaining confidence in the banking system. As the NDIC continues to address outstanding issues and work towards the full reimbursement of all depositors, it sets a new benchmark for deposit insurance practices in Nigeria.
