NDIC blames debtors of failed banks for delay in depositors’ payouts

The Nigerian Deposit Insurance Corporation (NDIC) has blamed delays in recovering loans from debtors of failed banks for the slow payment of depositors’ funds, accusing some borrowers of hiding assets, frustrating court proceedings and intimidating its officials to evade repayment.

The Director of Asset Management at the NDIC, Ogungbemi Theophilus, said this yesterday at the corporation’s Stakeholders’ Seminar and Public Relations Workshop in Abuja.

He said some borrowers wrongly assumed that revoking a bank’s operating licence automatically ends their obligation to repay outstanding loans.

He warned that prolonged recovery processes also erode the value of assets available for liquidation, as buildings depreciate, equipment deteriorates and outstanding loans become increasingly difficult to recover.

The NDIC’s Asset Management Department is responsible for recovering loans and managing the physical assets and investments of closed deposit money banks, primary mortgage banks and microfinance banks. Proceeds from these recoveries are used to pay depositors whose balances exceed the insured limits.

Deposits in deposit money banks, non-interest banks and mobile money operators are insured up to N5 million per depositor per bank, while the coverage limit is N2 million for microfinance banks, primary mortgage banks and payment service banks.

Theophilus said the insured limits fully covered about 99 per cent of depositors, while customers with balances above the thresholds had to depend on liquidation dividends from recovered loans and the sale of assets to receive their outstanding funds.

The corporation recently held public auctions on November 3 and 4 to dispose of assets belonging to Union Homes Savings and Loans, Heritage Bank, and Resort Savings and Loans in Lagos, Taraba and Adamawa states.

On the cost of asset recovery, Theophilus said expenses incurred in recovering assets must not exceed the value realised, warning that excessive recovery costs would further reduce the funds available to depositors.

He also warned professionals involved in the recovery and disposal of failed banks’ assets against insider dealing, undervaluation, collusion with prospective buyers and diversion of proceeds, saying the corporation would not tolerate such practices.

Theophilus disclosed that the NDIC was developing an Asset Management Policy to strengthen procedures for identifying, valuing and disposing of assets, as well as improve accountability in the recovery process.

The Abuja workshop is the first of three stakeholder engagements planned by the corporation, with subsequent sessions scheduled for Enugu and Lagos.