The Managing Director of the Nigeria Deposit Insurance Corporation, Bello Hassan, has said that the adoption of an improved depositor payment methodology helped in the timely reimbursement of the depositors of the defunct Heritage Bank.
Hassan said this on Tuesday in his welcome address at the retreat for members of the House of Representatives Committee on Insurance & Actuarial Matters held in Lagos.
The Central Bank of Nigeria revoked the licence of Heritage Bank and appointed NDIC as the liquidator in June.
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.
“It is instructive to mention that the corporation, using the Bank Verification Number of depositors obtained from the Nigeria Inter-Bank Settlement System, was able to access alternate accounts of customers and commence payment to depositors within a record time of four days.”
The NDIC boss noted that it was a significant milestone when compared with the historical period, which usually took a longer time.
He added that cumulatively, the corporation had paid 86 per cent of the total insured deposits.
“The corporation is making efforts to coplete the payments of the remaining 14 per cent of the insured deposits. Some of the insured depositors constituting these remaining 14 per cent 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,” he told the lawmakers.
The CBN explained that Heritage Bank’s licence was revoked due to the bank’s failure to improve its financial performance, posing a threat to financial stability.
According to the CBN, the bank’s management has been unable to stem the decline despite various supervisory steps taken by the regulator.
With no reasonable prospects of recovery, the CBN said it took action to protect the financial system and maintain public confidence.