The Nigeria Deposit Insurance Corporation (NDIC) has commenced the payment of insured deposits to customers of 46 microfinance banks (MFBs) whose operating licences were recently revoked by the Central Bank of Nigeria (CBN). The move is part of the corporation’s statutory responsibility to protect depositors and ensure confidence in Nigeria’s financial system.

According to the NDIC, eligible depositors are receiving their insured deposits through an automated payment process linked to their Bank Verification Numbers (BVNs) and alternative bank accounts. The corporation explained that this approach is intended to speed up reimbursements and reduce the need for customers to visit its offices physically.

The corporation also disclosed that it has intensified efforts to recover outstanding loans and dispose of the assets of the failed institutions. These recoveries are expected to fund additional payments to depositors whose account balances exceeded the maximum insured limit provided under the NDIC Act.

The 46 microfinance banks lost their licences after the CBN determined that they no longer met the regulatory requirements for continued operation. Following the revocation, the NDIC automatically assumed the role of liquidator, taking responsibility for closing the institutions, verifying claims, reimbursing depositors, and managing the liquidation process in accordance with the law.

The NDIC urged affected customers to cooperate during the claims process and ensure that their banking information is accurate to facilitate prompt payment. It also warned members of the public against carrying out transactions with the affected institutions or interfering with their records and assets, noting that such actions could attract legal sanctions.

Financial analysts said the prompt settlement of insured deposits is critical to maintaining confidence in Nigeria’s banking system, particularly within the microfinance sector, which provides financial services to millions of small businesses, traders, and low-income households. They noted that an effective deposit insurance system helps protect savers while reinforcing financial stability.

Stakeholders also believe that the orderly liquidation of failed financial institutions demonstrates the effectiveness of Nigeria’s financial safety framework. They stressed that strong regulatory oversight, prudent risk management, and prompt depositor protection remain essential to safeguarding public trust and ensuring the resilience of the country’s banking sector.

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The court held that NIBSS’s role in overseeing the BVN system is backed by the Central Bank of Nigeria (CBN) Act and other applicable banking laws. The judgment reaffirmed that the management of the BVN database does not violate the constitutional right to privacy and is essential for ensuring the stability of Nigeria’s financial ecosystem.

In a judgment delivered by Justice James Omotosho, the court declared that NIBSS is lawfully empowered to maintain the BVN and that such activity falls within the regulatory framework provided by the Central Bank of Nigeria Act of 2007 and the Banks and Other Financial Institutions Act (BOFIA) of 2020.

The judge emphasized that the BVN system serves a vital public interest and does not infringe upon individual privacy rights. The ruling dismissed previous objections raised by various groups, noting that NIBSS’s mandate to manage the database is both constitutional and statutory.

The court also issued a perpetual injunction restraining any individual, group, or institution from challenging NIBSS’s authority to oversee the BVN database, effectively reinforcing the role of the company in securing and streamlining Nigeria’s financial identity system.

This decision is expected to strengthen regulatory efforts aimed at combating financial fraud and enhancing transparency within the banking sector.

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