The Nigeria Deposit Insurance Corporation (NDIC) said it was recovering over N400 billion from debtors of liquidated banks in the country, even as it said the planned recapitalisation of the banking industry by the Central Bank of Nigeria (CBN) was a step in the right direction.
Speaking on the sidelines of the 2023 NDIC Workshop for Finance Correspondents in Owerri, Imo State, on Wednesday, the managing director and chief executive of the Corporation, Mr Bello Hassan, said substantial payments have been paid to over 40,000 depositors of the banks in liquidation.
Noting that more than N1.6 billion has so far been paid out, he said the amount paid out would have been more if depositors of the liquidated banks had come forward.
Hassan, while stating that the NDIC was faced with the challenge of debtors of the failed banks not wanting to pay back their loans, said: “one of the greatest challenges the NDIC is facing is debt recovery. A lot of customers of banks in liquidation that borrowed are not willing to repay those debts.
“Those debts or those loans that were granted were granted out of deposits of people that were collected by the banks.
“So, it is only when those debtors pay back that the NDIC would now be able to pay the depositors of those failed banks.
“With the revision of the 2023 NDIC Act, a lot of powers have been given to the Corporation in order to expedite this process.
“So, we are hoping to leverage that to ensure that we recover more, so that we can pay those depositors.
“The value of the debt that we are about to recover, if you take into account all the banks in liquidation that is the Deposit Money Banks (DMBs), the microfinance banks, the primary mortgage institutions, is well beyond N400 billion, and that is what we are expecting to recover so that we can pay depositors of those banks in liquidation.
“Already we have made a substantial recovery and will have made payment and that is why in the recent past, we have put out adverts that depositors of those failed banks should come forward so that we can verify them in order to pay what we call liquidation dividend, it’s what we pay over and above the insured amount and we are still doing that.
“And even for those banks that recently closed, that is those microfinance banks and the primary mortgage institutions whose licenses were revoked in May this year, we have also made substantial payments of the insured amount.
“In fact, today we would have paid more than N1.6 billion to more than 40,000 depositors and we are calling on the depositors of those institutions, especially those that do not have Bank Verification Number (BVN) attached to their bank accounts to come forward so that we can get them verified in order to pay them the insured amount. Immediately we finish that, we have already commenced the assessment and valuation of the assets of those banks’ liquidation so that we can equally dispose of them in order to enable us to pay the liquidation dividend which is over and above the insured amount.”
On the planned recapitalisation of the banking industry by the governor of the CBN, Hassan said: “the Central Bank has already put forward that they are going to embark on recapitalization.
“So, it is important for us to just wait and see the clear direction, what that requirement is going to be how much level of recapitalisation will be required.
“As we speak, if you look at the performance of the industry, it is very sound. If you look at the look at the key financial soundness indicators of capital adequacy, liquidity, earnings and quality of asset but certainly, the government is trying to grow our GDP to $1 trillion. You also need bigger banks to be able to play within that space.
“As the government is implementing the agenda of growing the GDP to beyond $1 trillion.
“You also need bigger banks to be able to play in that space and I believe it is within that context that CBN is looking at recapitalising banks. So, we await the CBN for further details on this recapitalisation process.”
Speaking on the role of NDIC in ensuring bank customers were not left hanging in the event of the liquidation of a bank, he said: “the Corporation has reached an advanced stage in the review of the maximum deposit insurance coverage, to account for the impact of macroeconomic developments, since its last review.
“It is our belief that the new coverage level, once approved, will go a long way in reinforcing depositors’ confidence on the NDIC’s deposit guarantee scheme.
“In complementing the consumer protection efforts of the CBN, we have enhanced public awareness on the benefits and limitations of the deposit insurance system and financial literacy, to reduce the rate at which small depositors are being defrauded, thereby enhancing confidence in the banking system; we have invigorated our liquidation activities, and greatly increased debt recovery rate leading to declaration of 100 per cent liquidation dividends to depositors of over 20 deposit money banks in-liquidation; and we have also improved our systems, processes and procedures to promote transparency and accountability in our operations, amongst other humble achievements.”