NDIC adopts NIBSS for payments to Heritage Bank insured depositors
The Nigeria Deposit Insurance Corporation has announced the use of the Nigeria Inter-Bank Settlement System to process payments to insured depositors of the defunct Heritage Bank.This decision is in response to identified limitations in the Remita payment platform that hampered efficient disbursement.
According to Nairametrics, the Deputy Director of the NDIC made this disclosure at the Enugu Zonal Office during a workshop for business editors and members of the Finance Correspondents Association of Nigeria in Lagos.
She described the switch to the NIBSS as a strategic move to improve the efficiency of payments to the now-defunct Heritage Bank's insured depositors.
Roberts explained that the NDIC had been using the Remita platform for payments since 2013.
However, she noted that the system faced challenges, particularly in managing large-scale payouts, prompting the switch to more NIBSS for disbursing funds to Heritage Bank's insured depositors.
She stated, "The Corporation has used Remita to effect payments since 2013, but there were some limitations in terms of payment uploading, account name and number validity, and so on. During Heritage Bank's insured payments, the Corporation considered using the NIBSS payment platform to facilitate a larger number of payments at once.
Roberts also stated that Remita's stringent verification process could result in the entire batch of payments being rejected if there was a mismatch between an account name and its corresponding record.
This issue resulted in significant payout delays, requiring manual intervention and complicating the disbursement process.
Despite the transition to NIBSS, the NDIC encountered additional challenges with the Bank Verification Number (BVN) system.
Roberts pointed out that not all depositors were adequately represented in the NIBSS data, limiting the ability to process automatic payments effectively.
She stated: "It was discovered that the data dumps received from NIBSS did not include all BVN account holders in the bank. As a result, the number of depositors eligible for automatic payment was limited.
"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."
She also stated that some payments were delayed due to legal restrictions, such as Post-No-Debit (PND) status on specific accounts, which was caused by court rulings or liens.
The NDIC also stated that it successfully paid 84.98% of Heritage Bank depositors whose accounts were linked to their Bank Verification Numbers.
Bello Hassan, NDIC Managing Director and CEO, provided an update at the workshop, emphasizing the corporation's commitment to protecting depositors and ensuring timely compensation.
Hassan emphasized that this achievement is consistent with the International Association of Deposit Insurers' (IADI) Core Principle 15, which requires timely payouts to depositors of failed banks.
He explained that the NDIC, acting as liquidator, successfully managed Heritage Bank's orderly resolution and initiated depositor payouts in accordance with the Banks and Other Financial Institutions Act 2020 and the NDIC Act 2023.
He stated, "In carrying out this critical role of depositor reimbursement, the corporation began paying insured deposits of up to N5 million per depositor within four days of the bank's closure."
"This was accomplished by using Bank Verification Numbers (BVN) as a unique identifier to locate depositors' alternate accounts in other banks, eliminating the need to fill out forms or visit NDIC offices.
"This innovative approach has indeed, enabled the payment of 84.98% of depositors with BVN linked accounts to date."
Hassan stated that the prompt payments helped mitigate the impact of Heritage Bank's failure, especially during a period of economic uncertainty.
While many depositors have received their insured deposits, he emphasized that the NDIC is committed to reimbursing those with balances greater than the N5 million insurance limit.
To that end, the NDIC has started debt recovery processes and is working to sell Heritage Bank's physical assets in order to pay off uninsured deposits more quickly.
"These uninsured deposits represent a significant portion of the total deposits in Heritage Bank," he said, emphasizing that the NDIC is committed to reimbursing these depositors once asset recovery efforts are completed.
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