NDIC urges Heritage Bank depositors to comply with KYC for reimbursement

The Nigeria Deposit Insurance Corporation (NDIC) has called on the depositors of the now-defunct Heritage Bank, who are yet to receive their insured deposits, to comply with Know Your Customer (KYC) requirements as mandated by the Central Bank of Nigeria (CBN).

This measure, according to the NDIC, is vital to facilitate smooth banking transactions and ensure prompt reimbursement in cases of bank closures.

Speaking at the 2024 edition of the NDIC Editors forum in Lagos, Bello Hassan, NDIC’s managing director and CEO, highlighted the challenges faced in reimbursing some depositors. He stressed that strict compliance with KYC protocols could resolve such issues effectively.

Hassan, represented by Mustafa Ibrahim, executive director of operations, noted, “I wish to reiterate that the Corporation is not unaware of the case of some depositors who are yet to access their guaranteed sums. This development is a result of reasons ranging from reconciling inconsistencies in the defunct bank’s depositor database to the absence of Bank Verification Numbers (BVN), placement of restrictions on some accounts, and, in some cases, name mismatches.”

He further assured depositors that efforts are ongoing to address these challenges. “The Corporation is working assiduously to resolve these issues and ensure that depositors are promptly paid,” he added.

Heritage Bank’s license was revoked by the Central Bank of Nigeria (CBN) on June 3, 2024, leading to its closure. In line with the provisions of the Banks and Other Financial Institutions Act (BOFIA) 2020 and the NDIC Act 2023, the NDIC was appointed as the liquidator to oversee the bank’s resolution and manage depositor reimbursements.

TWithin four days of the bank’s closure, the NDIC began paying insured deposits of up to N5 million per depositor. Utilis ing Bank Verification Numbers as unique identifiers, the NDIC located depositors’ alternate accounts in other banks, streamlining the process without requiring depositors to fill out forms or visit NDIC offices.

“This innovative approach has enabled the payment of most depositors with BVN-linked accounts to date,” Hassan explained. He further noted that the recent increase in deposit insurance coverage from N500,000 to N5 million by the Corporation has significantly reduced the impact of bank failures on affected depositors.

The NDIC’s approach aligns with international best practices, particularly the International Association of Deposit Insurers (IADI) Core Principle 15, which emphasises timely payouts to depositors of failed banks. According to Hassan, this proactive measure underscores the Corporation’s commitment to depositor protection.

For depositors with balances exceeding N5 million, the NDIC is working to ensure they receive the remainder of their funds through liquidation dividends. Hassan explained, “Depositors with amounts over the maximum insured amount of N5 million will be paid from the realisation of the defunct bank’s assets and recovery of debts.” He added that the Corporation has already begun recovering debts and realising investments and physical assets of the defunct bank to facilitate these payments.

The NDIC’s responsibility extends beyond depositors to include the creditors of Heritage Bank, who will be reimbursed after all depositors have been fully paid. This systematic process, which prioritizes claims based on asset realisation, is aimed at maintaining public trust in the banking sector and fostering financial stability.

As the NDIC continues its efforts, it calls on depositors to fulfill all necessary KYC requirements to expedite the reimbursement process. Hassan concluded, “Our goal is to ensure that every depositor receives their due, and we are committed to resolving all challenges in this regard.”