Debt Dilemma: Liquidated Bank Customers Unwilling to Repay N400 Billion, Says NDIC

InfoStride News reports that the Nigeria Deposit Insurance Corporation (NDIC) is actively pursuing the recovery of over N400 billion from debtors of liquidated banks who are reluctant to repay their debts. In his opening remarks at the 2023 NDIC Workshop for Finance Correspondents in Owerri, Imo State, Mr. Bello Hassan, the Managing Director and Chief Executive Officer of the Corporation, emphasized the significant challenge of debt recovery.

Highlighting the issue, Hassan stated, “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.” He emphasized that these debts or loans were granted using deposits collected by the banks. The recovery of these funds is crucial for the NDIC to fulfill its obligation of compensating depositors of failed banks. The revised 2023 NDIC Act has granted additional powers to the Corporation to expedite the debt recovery process, providing a strategic avenue to enhance their efforts.

The MD revealed the substantial scale of the debt recovery effort, stating, “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.” This substantial sum is anticipated to contribute significantly to paying off the depositors of the banks in liquidation.

In terms of progress, Hassan shared that over N1.6 billion has already been paid to over 40,000 depositors of the liquidated banks. He highlighted the Corporation’s commitment to facilitating the verification and payment process, urging depositors to come forward, especially those without a Bank Verification Number (BVN) attached to their accounts.

Furthermore, Hassan addressed the recent revocation of licenses for microfinance banks and primary mortgage institutions in May of the current year. Despite these closures, the NDIC has made substantial payments of the insured amount to depositors. The ongoing assessment and valuation of the assets of these liquidated banks aim to enable the payment of liquidation dividends, which go beyond the insured amount.

Shifting focus to the broader financial landscape, Hassan expressed support for the Central Bank of Nigeria’s (CBN) planned recapitalization of the banking industry. He regarded this move as a step in the right direction and essential for achieving the national goal of a $1 trillion economy. Hassan acknowledged the sound performance of the banking industry based on key financial indicators but emphasized the need for larger banks to effectively contribute to the ambitious GDP growth target.

Concluding his remarks on the recapitalization initiative, Hassan stated, “So, we await the CBN for further details on this recapitalization process.” This anticipation reflects the recognition of the pivotal role recapitalized banks will play in supporting the government’s agenda to propel the GDP beyond the $1 trillion mark. The NDIC, through its strategic actions and collaborations, is actively navigating the challenges posed by debt recovery and contributing to the resilience and growth of the Nigerian financial sector.