NDIC Warns Against Diversion of Funds Recovered From Failed Banks

The Nigeria Deposit Insurance Corporation (NDIC) has declared zero tolerance for the diversion of funds generated from the recovery and sale of assets belonging to failed banks, warning professionals and other stakeholders involved in the liquidation process against financial misconduct.

The Director of the NDIC’s Asset Management Department, Oluyinka Ogungbemi, gave the warning on Monday in Abuja during a stakeholders’ seminar and public relations workshop organised by the department.

Ogungbemi said funds realised from the sale or recovery of failed banks’ assets were meant to settle outstanding obligations to depositors and other eligible creditors, stressing that NDIC staff did not have direct access to the funds.

He said the corporation maintained strict accountability measures to ensure that proceeds from asset recovery were properly managed and applied.

The director identified asset realisation as one of the most challenging aspects of bank liquidation, noting that recovering loans owed to failed financial institutions was particularly difficult.

According to him, borrowers who defaulted on loans while their banks were operational often became more difficult to reach or compel to repay after the institutions were closed.

He warned that delays in pursuing outstanding debts could further reduce the value of recoverable assets and complicate the liquidation process.

“We are expected to recover assets timely, as delay erodes value because a loan not pursued becomes difficult to recover,” he said.

Ogungbemi said the workshop was part of efforts to improve the recovery of loans and other assets while strengthening public confidence in the liquidation process.

He urged estate surveyors, valuers, auctioneers, recovery agents and other professionals working with the corporation to maintain high ethical and professional standards.

He also described the engagement as a strategic initiative to strengthen relationships between the NDIC and stakeholders involved in identifying, valuing, recovering and disposing of assets belonging to failed banks.

Under Nigeria’s deposit insurance framework, the NDIC reimburses depositors up to the applicable insured limit when a bank’s operating licence is revoked. Amounts exceeding that limit are settled through liquidation dividends generated from the recovery of outstanding loans and proceeds from the sale of the failed institution’s assets.

The corporation has previously explained that these recoveries are essential to reimbursing depositors whose balances exceed the insured threshold.

The NDIC said improved collaboration with stakeholders would help accelerate asset recovery, reduce delays and ensure that eligible depositors receive funds due to them.