With the onerous task of ensuring the health of Nigerian banks, the Nigeria Deposit Insurance Corporation (NDIC) sits on one of the tripods that sustain the Nigerian economy.

In delivering its mandate over the years, the Corporation has overseen the liquidation of 651 financial institutions, including 50 deposit money banks (DMBs), 55 primary mortgage banks (PMBs) and 546 microfinance banks (MFBs).

Winding down banks, indeed, requires a deftness of carefulness as missteps could spell doom for the economy. Skills and competence of staff are needed.
Revoking of operational licence would certainly engender a hostile environment for the management of the affected banks. Also, the volume of work requires massive resources, which are needed especially when it involves multiple bank closures.

Litigation challenges are sure to happen as shown by the closure of Savannah and Société Generali Bank of Nigeria, which were aborted by litigation.

The NDIC confirmed this strenuous process revealing it has been addressing litigation issues on Triumph and Fortune banks for over 14 years and has no idea of when the suits will be fully determined.

This results in delayed revocation of licenses which often leads to asset stripping and destruction of documents and collaterals.

Speaking in Lagos at the NDIC/FICAN workshop, the NDIC’s deputy director, Enugu Zonal Office, Pamela Roberts, said safeguarding the healthy standing of banks has been an arduous task.

“In most cases, the bank staff were uncooperative and unfriendly in assisting NDIC staff. Many bank closing exercises have been stalled by aggrieved creditors like landlords who were owed unpaid rent. Some depositors have shown anger that exposes closing teams to danger.

“Many banks scheduled for closure are yet to be located because of the deliberate acts of the promoters and management. Also, banks had gone into self-closure before the official announcements. However, such self-closure would not be a substitute for official closure. The proper closing of such banks is an unresolved challenge of NDIC as such banks are yet to be identified physically. The general insecurity in the country has affected bank closing where some closing teams were unable to carry out their assignments effectively,” she explained.

She identified expired annual software maintenance agreements, resigned key IT staff, damaged hardware and servers as well as the absence of back-ups as part of the challenges confronting the Corporation in the execution of its mandate.

In a step aimed at fostering a resilient banking industry, the NDIC has designed a 2012 – 2025 strategic plan which focuses on strengthening and deepening orderly bank liquidation and deploys innovations in bank closing while others were introduced during the recent closure of Heritage Bank.

A deposit tracer was conceptualized to address the challenge of depositors’ apathy. The primary focus is to trace the identities of depositors with at least N5 million. In partnership with a Mobile Money Operator (MMO), it enabled small depositors to access their funds through mobile accounts.

A digital solution named the ‘Single Customer View’ framework has also been introduced to provide a unified, comprehensive, and real-time view of a customer’s information and interactions across multiple channels and systems.

NDIC has deployed a mobile application to unlock the power of better connection with customers, and stakeholders of both closed and banks that are operating while facilitating depositors’ verification and reports on claims payment issues.

On why claims by depositors were not settled swiftly, the NDIC explained that a lot of accounts were dropped because the name on the payment schedule was different from the name in the deposit register, several duplications of depositors’ names while some accounts that operated in the same capacity were not amalgamated and most of the walk-in verified depositors were dropped by audit because the information, they provided did not match the one in the deposit register.

Going forward, the Corporation stated that it is planning to enhance public awareness deployment of the portal for unclaimed dividends and ensure information on depositors is properly documented.

It added: “The Banks should be compelled to comply with regulatory requirements such as the need to ensure that all the customers have BVN… Further, improve capacity building and capabilities of staff through claims reimbursement simulation.”

It restated its commitment to adopting electronic forms for depositor verification instead of physical forms to avoid duplications in processing payments and keeps exploring the use of Artificial Intelligence and blockchain technologies to facilitate efficient claims reimbursement.

Stressing the importance of confidence in the maintenance of financial system stability and the role of deposit insurance, the managing director of the NDIC, Bello Hassan said as one of the safety nets for the reassurance of depositors, the NDIC has been instrumental in promoting stability by ensuring that when banks fail, depositors are protected, and their funds are reimbursed promptly.

Bello stressed that as Nigeria’s financial system continues to evolve and face new challenges, the NDIC remains steadfast in its mission to protect depositors and collaborate with the Central Bank of Nigeria (CBN) in ensuring the stability of the banking sector, which is critical to the growth and development of the economy.