NDIC Reimburses Customers of Heritage Bank’s Liquidation for 82.36% of Protected Deposits

Customers of the now-defunct Heritage Bank have successfully received 82.36% of the total insured deposits from the Nigeria Deposit Insurance Corporation (NDIC), after the Central Bank of Nigeria (CBN) revoked the bank’s license on June 3, 2024.

The NDIC said in a statement that it has successfully started paying depositors, up to a limit of N5 million per depositor. Bashir A. Nuhu is the Director of Communication & Public Affairs.

In just four days after the bank closed, this milestone was reached by using Bank Verification Numbers (BVN) to find the alternative accounts that depositors had with other banks. 

The statement said: “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 directives negatively impact 17.64% of insured savings.

Even while the NDIC has made great strides—more than 82% of insured deposits have already been paid out—the remaining 17.64% are still outstanding because of problems with Post No Debit (PND) orders, BVN absence, or the unavailability of substitute bank accounts. We’re working to get in touch with these depositors and finish the verification procedure.

As stated in the statement: “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.“

“The Corporation is currently contacting this group of depositors via phone calls and text messages to come forward for verification.”

The NDIC stated that it is making every effort to reclaim and liquidate the bank’s assets for those whose deposits exceed the insured limit of N5 million. These uninsured amounts would eventually be paid as liquidation dividends, the NDIC added.

The NDIC guaranteed that after the assets of the bank fail and the outstanding obligations are paid off, the remaining amounts, which are classified as uninsured deposits, will be settled through liquidation dividends.

The statement mentioned: “The Corporation has already initiated the process of debt recovery and realization 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 the availability and realization of assets of the bank in the form of liquidation dividend.” 

What to note 

Citing the bank’s ongoing financial instability and regulatory violations, the Central Bank of Nigeria (CBN) has terminated Heritage Bank Plc’s banking license with immediate effect.

Section 12 of the Banks and Other Financial Institutions Act (BOFIA) 2020 outlines the CBN’s mandate, which includes this decision, to maintain a healthy financial system in Nigeria.

The CBN revealed in a statement that regulatory action was required because Heritage Bank has not complied with Section 12 (1) of BOFIA 2020. 

Heritage Bank has not been able to strengthen its financial position in spite of the CBN imposing several regulatory measures to counteract the bank’s deteriorating financial performance.

The CBN has to cancel the bank’s license because of its persistent underperformance, which seriously jeopardizes the stability of the financial system.

In addition, the CBN stressed how important the measure is to maintain public trust in Nigeria’s banking industry and to guarantee the integrity and stability of the financial system.