By Jennete Ugo Anya
The closure of 46 microfinance banks by the Central Bank of Nigeria (CBN) has moved into its next phase, with the Nigeria Deposit Insurance Corporation (NDIC) beginning payments to depositors affected by the licence revocations.
NDIC Managing Director and Chief Executive Officer, Mr. Thompson Sunday, disclosed this at the 2026 stakeholders’ retreat for members of the House of Representatives Committee on Insurance and Actuarial Matters in Lagos, themed “Strengthening Financial Safety Nets in an Era of Banking Sector Recapitalisation and Fintech Innovation.”
The CBN revoked the licences of the 46 microfinance banks in July after they failed to meet regulatory requirements. The affected institutions included banks with inadequate assets to meet liabilities, those that ceased operations without regulatory approval, stopped financial intermediation, failed to commence operations within 12 months of obtaining their licences, or failed to maintain the required minimum capital base unimpaired by losses.
Following the revocations, NDIC was appointed provisional liquidator and began the process of reimbursing depositors whose funds are covered under the deposit insurance framework.
“The CBN revoked the licenses, and we became appointed as the provisional liquidator. We have started paying depositors of those banks, and gradually, we intend to cover all the insured depositors,” Sunday said.
The payment process, however, is not limited to simply reimbursing guaranteed deposits. NDIC must also pursue recoveries from debtors and realise the assets and investments of the failed institutions to address deposits that fall outside the insured limit.
“Our function as liquidator would involve payment of guaranteed sums. Thereafter, what we do is we go after those who are owing the institutions and have not paid.
“We also make sure that we sell the assets that are available and also realise their investment towards paying the uninsured portion of the deposit.”
A significant change in the process is the use of bank-account information linked to Bank Verification Numbers (BVNs). Sunday said NDIC was working with the Nigeria Inter-Bank Settlement System (NIBSS) to identify alternative accounts belonging to affected depositors and make payments without requiring them to submit individual claims.
“Hitherto, we used to depend on people to come file for payment, but now, in collaboration with the Nigeria Inter-Bank Settlement System, what we do is, for every account that has a BVN, we trace your alternative account in other institutions and make payments to you automatically.
“So, the more we discover those, the more we start payment.”
The approach reflects a broader shift towards using Nigeria’s financial-data infrastructure to make deposit insurance payouts faster and less dependent on physical claims.
Sunday said the same mechanism had been applied in the reimbursement of verified depositors of the defunct Heritage Bank, where about 700,000 depositors had been paid.
According to him, insured deposits were paid within less than four days of Heritage Bank’s failure, while liquidation dividends were subsequently declared for depositors whose balances exceeded the insured limit.
The Heritage Bank experience also illustrates the limits of automated tracing. Some depositors could not be identified through available databases and still need to establish ownership of their accounts and provide relevant documentation.
“For the guaranteed sum, we do not need you to come to be paid. Of course, there are challenges in the Nigerian system.
“There are depositors that we have not been able to trace, and this is an opportunity for them to also come forward.”
The microfinance-bank closures therefore place NDIC’s deposit insurance system under another practical test. The immediate task is to reimburse insured depositors, while the longer liquidation process involves recovering debts, selling assets and determining what can be returned to depositors whose balances exceed insured limits.
For depositors, the shift towards automatic BVN-based payments could make the process significantly easier. For the wider financial system, the exercise also demonstrates the role of deposit insurance as a safety net when financial institutions fail to meet regulatory requirements.
The continuing process will ultimately be measured not only by how quickly guaranteed deposits are paid, but also by how effectively NDIC recovers assets and manages the uninsured portion of depositors’ claims.
