The Nigeria Deposit Insurance Corporation (NDIC) has adopted the Nigeria Inter-Bank Settlement System (NIBSS) to pay insured depositors of the now-defunct Heritage Bank, citing limitations in the Remita payment platform.
Pamela Roberts, NDIC’s Deputy Director at the Enugu Zonal Office, disclosed this during a workshop for business editors and members of the Finance Correspondents Association of Nigeria (FICAN), held in Lagos.
Roberts explained that while the NDIC had relied on Remita for payments since 2013, the platform presented challenges, particularly in handling large-scale payouts.
She said: “The Corporation had used Remita to effect payments from 2013 which had a few limitations in terms of uploading of payments, validity of account name and number etc. During the insured payments of Heritage Bank, the Corporation explored the option of using the NIBSS payment platform to facilitate larger number of payments at one time.”
The NDIC’s Deputy Director further noted that Remita’s stringent verification process, where the entire batch of payments could be rejected if there was a mismatch between an account name and the corresponding record, led to delays in payouts, requiring manual intervention.
Despite the transition to NIBSS, the NDIC encountered some other challenges related to the Bank Verification Number (BVN) system.
Roberts pointed out that not all depositors were captured in the NIBSS data, which limited the automatic payments.
She said: “It was observed that the data dumps that were received from NIBSS did not capture all BVN account holders in the bank. Thus, limiting the number of depositors that could be paid automatically.
“The data dump of all account holders in the defunct bank that were tied to a BVN, for providing alternate accounts for payment of the depositor’s insured sum revealed that many depositors had accounts solely with the failed bank.
“The subsequent need for physical verification of depositors, to collect their information and alternate accounts for payments led to large depositor turnout, at the Head Office and Zonal Offices which was tumultuous.”
She also mentioned that some payments were delayed due to legal restrictions such as Post-No-Debit (PND) status on certain accounts, resulting from court rulings or liens.
The NDIC also said that it has successfully paid 84.98% of depositors from Heritage Bank whose accounts were linked to their BVN. NDIC Managing Director and CEO, Bello Hassan, disclosed this at the workshop, highlighting the corporation’s commitment to depositor protection.
Hassan emphasized that this achievement aligns with the International Association of Deposit Insurers (IADI) Core Principle 15, which calls for timely payouts to depositors of failed banks.
He explained that the NDIC, acting as the liquidator, managed the orderly resolution of the bank and initiated payouts to depositors under the provisions of the Banks and Other Financial Institutions Act (BOFIA) 2020 and the NDIC Act 2023.
He said: “In the discharge of this critical role of depositor reimbursement, the corporation began the payment of the insured deposits of N5 million maximum per depositor within a record time of four days of the bank’s closure.
“This was achieved using Bank Verification Numbers (BVN) as a unique identifier to locate depositors’ alternate accounts in other banks without the need to fill forms or visits the NDIC offices.
“This was achieved using Bank Verification Numbers (BVN) as a unique identifier to locate depositors’ alternate accounts in other banks without the need to fill forms or visits the NDIC offices.
“This innovative approach has indeed, enabled the payment of 84.98% of depositors with BVN linked accounts to date.”
Hassan noted that the prompt payments helped mitigate the impact of the bank’s failure, especially during a period of economic uncertainty.
While a significant portion of depositors have received their insured deposits, Hassan reiterated that efforts are underway to ensure that depositors with balances exceeding the N5 million insurance limit are also reimbursed.
He mentioned that the NDIC has initiated debt recovery processes and is working on the realization of Heritage Bank’s physical assets to facilitate the payment of uninsured deposits.
“These uninsured deposits represent a significant portion of the total deposits in Heritage Bank,” he added, emphasizing that the NDIC is committed to reimbursing these depositors once asset recovery efforts are complete.
Hassan also assured creditors of the defunct bank that they would be paid once all depositor claims have been fully settled.