NDIC Seeks Early Detection of Bank Vulnerabilities to Prevent Financial Crises

• Warns Nigerians against unlicensed fund managers, unrealistic returns

James Emejo and Aminat Hassan in Abuja

Managing Director/Chief Executive, Nigeria Deposit Insurance Corporation (NDIC), Mr. Thompson Oludare Sunday, yesterday disclosed the corporation had intensified efforts to identify vulnerabilities in financial institutions early and strengthen safeguards against problems that could escalate into wider financial crises.

He spoke at the NDIC Special Day at the 21st Abuja International Trade Fair organised by the Abuja Chamber of Commerce, Industry (ACCI).

Sunday said the corporation was increasingly positioning itself not merely as a payer of claims after bank failures but as a “risk minimizer” within financial safety-net architecture.

Represented by NDIC Head, Communication and Public Affairs, Hawa Gambo, he explained that the corporation’s supervisory activities involved examining banks’ books, assessing the quality of their loan portfolios and determining whether assets pledged as collateral could be realised when required.

He said the approach was designed to identify weaknesses early and strengthen safeguards before institutional problems developed into broader crises.

According to him, the NDIC had continued to strengthen its institutional framework through the deployment of Risk-Based Supervision, an enhanced Differential Premium Assessment System, the Single Customer View Framework, a distress resolution suite and the Bank Liquidation Management System.

He added that these measures were being complemented by stronger collaboration with the Central Bank of Nigeria (CBN) and other institutions within the financial safety-net architecture.

Sunday said the NDIC’s mandate of deposit guarantee, bank supervision in collaboration with the CBN, failure resolution and bank liquidation remained critical to maintaining confidence in the banking system.

He noted that the corporation had in 2024 raised the maximum insured deposit limit to N5 million per depositor per Deposit Money Bank and Mobile Money Operator, while the limit for Microfinance Banks, Primary Mortgage Banks and Payment Service Banks was increased to N2 million.

The enhanced coverage, he said, provided full protection for more than 98 per cent of depositors across insured institutions, helping to shield households, small businesses and other vulnerable depositors from the immediate effects of bank failures.

For depositors with balances above the insured limits, he said the NDIC continued to pay liquidation dividends from recoveries arising from debts owed to failed institutions and the disposal of their physical assets.

Sunday also disclosed that the corporation had transformed its reimbursement process through the use of technology, including the Bank Verification Number (BVN), Single Customer View and NIBSS infrastructure.

He said verified depositors of failed banks could now receive their insured deposits within days of bank closure, compared with the cumbersome manual processes previously associated with reimbursement.

The NDIC boss hiwever, urged Nigerians to keep their money in licensed and regulated financial institutions, warning against entrusting savings to unlicensed fund managers and schemes promising extraordinary returns.

He said some Nigerians still kept substantial funds outside the formal banking system or placed their savings with unlicensed operators because of promises of unusually high returns.

He said, “The proliferation and collapse of Ponzi schemes have demonstrated, time and again, the enormous financial and emotional cost of placing hard-earned resources in unregulated schemes.”

He urged prospective investors to verify investment opportunities and the regulatory status of operators before committing their funds, particularly where returns appeared unrealistic.

He also called for greater financial literacy among households and businesses, arguing that informed depositors remained an important line of defence against financial losses.

The NDIC chief further disclosed that the corporation had launched an upgraded website on September 19, designed as a digital gateway for depositors and other stakeholders.

He said the platform provided access to information on deposit insurance coverage, claims processing and institutions insured by the NDIC, alongside services for filing claims, checking banks, reporting failed banks and accessing frequently asked questions.

According to him, the platform also incorporates an artificial-intelligence-powered virtual assistant to facilitate access to information and improve interaction with the corporation.

Sunday, among other things, urged depositors to ensure that their account information was accurate and properly linked to their BVNs to facilitate faster reimbursement when necessary.