BVN key to faster reimbursement of failed bank depositors – NDIC

The Nigeria Deposit Insurance Corporation (NDIC) has underscored the critical role of the Bank Verification Number (BVN) in facilitating the prompt reimbursement of customers affected by bank failures, describing it as a primary tool for “automatic” payouts.

Thompson Oludare Sunday, Managing Director and Chief Executive of NDIC, made this known during the Corporation’s Special Day at the 37th Enugu International Trade Fair, themed “Empowering MSMEs for Global Competitiveness.”

Sunday represented by Gambo Hawal, Director of Communication, reaffirmed the Corporation’s commitment to maintaining financial system stability and protecting depositors.

Sunday disclosed that NDIC’s insurance coverage currently protects about 99 percent of depositors in Nigeria’s banking sector.

He added that the Corporation had strengthened its coverage limits in response to prevailing economic conditions.

Under the revised structure, depositors in Deposit Money Banks (DMBs), Mobile Money Operators, and Non-Interest Banks are insured up to N5 million, while those in Microfinance Banks and Primary Mortgage Banks are covered up to N2 million.

Explaining the reimbursement process, Sunday noted that NDIC does not depend on Government funding to compensate depositors. Instead, it draws from the Deposit Insurance Fund (DIF), which is financed through premiums paid by licensed banks.

He emphasised that the integration of BVN into the system has significantly improved efficiency, enabling the corporation to trace depositors’ alternative accounts and credit them within days of a bank’s closure, thereby eliminating delays previously associated with manual processes.

Addressing concerns of depositors with balances exceeding insured limits, Sunday assured that such funds are not entirely lost. He explained that additional payments, known as liquidation dividends, are made from proceeds recovered through debt repayments and the sale of assets of failed banks.

“These payments are made in tranches as more funds are recovered. We have successfully implemented this in cases such as Union Homes, Aso Savings and Loans, and more recently Heritage Bank, where multiple dividend payments have already been made,” he said.

The NDIC boss also cautioned Nigerians against patronising fraudulent financial schemes and so-called “wonder banks,” urging the public to remain vigilant.

Earlier, Nnanyelugo Onyemelukwe, President of the Enugu Chamber of Commerce, Industry, Mines and Agriculture (ECCIMA), represented by the first Deputy, Eric Chime, called on the Central Bank of Nigeria (CBN) to strengthen regulatory measures to reduce the incidence of bank failures and protect depositors.

He stressed that proactive oversight is crucial to preventing financial losses, particularly in the current economic climate.

Onyemelukwe commended NDIC for its consistent participation in the trade fair, noting that its presence helps raise public awareness of its mandate and activities. He described the corporation as a “beacon of hope” for depositors, providing a vital safety net in times of financial distress.

Reflecting on past banking crises, he noted that the establishment of NDIC had significantly improved depositor protection, sparing Nigerians the heavy losses once experienced during bank collapses.

While acknowledging the relative stability in the banking sector, Onyemelukwe urged the CBN to ensure that its policies do not inadvertently create panic or place undue pressure on depositors.

He applauding both NDIC and the CBN for their continued efforts in safeguarding the nation’s financial system.