NDIC Boosts Partnership with Judiciary to Expedite Prosecution of Failed Banks

The Nigerian Deposit Insurance Corporation (NDIC) has reinforced its collaboration with the judiciary to fast-track the prosecution of failed financial institutions, as part of efforts to promote accountability in the banking sector. NDIC Managing Director, Bello Hassan, made this announcement on Monday at the 19th Abuja International Trade Fair, held under the theme “Mobility: Options for Transport, Trade Finance, and Taxation.”

Hassan revealed that the strengthened partnership has already led to the resolution of long-standing legal cases, with over 20 closed banks now paying out 100% liquidation dividends to uninsured depositors. This move, he stressed, is critical to maintaining stability in Nigeria’s financial system and restoring public confidence in the banking sector.

“Deposit insurance is a vital safety net in any financial system where confidence is paramount,” Hassan said. “The NDIC has played a pivotal role over the years in ensuring that when banks fail, depositors are promptly compensated, in line with the provisions of the Banks and Other Financial Institutions Act 2020 and the NDIC Act 2023.”

Bank collapses have long plagued Nigeria’s financial sector, with increasing calls from stakeholders for legal action against negligent board directors. The NDIC’s renewed focus on prosecution is seen as a necessary step in addressing the impunity that has allowed some of these failures to persist unchecked.

In his remarks, Hassan reassured depositors that the corporation is determined to pursue legal accountability for those responsible. “We are actively addressing the impunity of bank directors by implementing measures to prosecute them. This is essential for promoting long-term financial stability.”

He further highlighted the NDIC’s innovative approach to compensating depositors affected by recent bank closures, such as the case of Heritage Bank. “In an unprecedented achievement, the NDIC began payments to depositors within four days of Heritage Bank’s closure. By leveraging Bank Verification Numbers (BVNs) as unique identifiers, we were able to credit insured amounts of up to N5m directly into alternate accounts without the need for depositors to visit NDIC offices.”

Hassan noted that this approach has enabled the NDIC to compensate 84.98% of depositors with BVN-linked accounts, significantly reducing the impact of the bank’s collapse. He also pointed to the recent increase in deposit insurance coverage from N500,000 to N5m as a major step in protecting depositors and bolstering trust in the system.

The President of the Abuja Chamber of Commerce and Industry, Emeka Obegolu, lauded the NDIC’s role in safeguarding depositors and promoting financial stability. Represented by the chamber’s Director-General, Agaba-Idu Jideani, Obegoludescribed the NDIC as a cornerstone of Nigeria’s economic progress.

“The NDIC has been instrumental in promoting confidence in our banking system,” Obegolu said. “As we focus on the theme of this year’s trade fair—‘Mobility Options for Transportation, Trade Finance, and Taxation’—we recognise that a stable and trustworthy financial system is crucial for the smooth movement of goods, services, and capital.”

He added that NDIC’s efforts not only promote economic growth but also create a foundation for seamless trade and investment, further reinforcing national development.

As Nigeria continues to navigate the challenges of its financial landscape, the NDIC’s focus on legal accountability, depositor protection, and sectoral stability is poised to play a crucial role in ensuring a stronger, more resilient banking system.