…Seek Better Protection for Depositors
By Christiana Ekpa
The House of Representatives has called on the Central Bank of Nigeria (CBN) to conduct a comprehensive investigation into the collapse of Heritage Bank, amid allegations of mismanagement and wrongdoing.
The House also seeks to amend the Nigeria Deposit Insurance Corporation Act to increase the minimum insured amount and provide better protection for depositors.
The House also resolved that the CBN’s investigation should ascertain any possible mismanagement or wrongdoing that led to the bank’s collapse, which has left depositors with significant financial losses.
The House also urged the Nigerian Deposit Insurance Corporation (NDIC) to review its operations and compensation scheme to offer more meaningful relief to depositors.
The motion, by Hon. Uchenna Harris Okonkwo, noted that the collapse of Heritage Bank has caused significant financial distress and uncertainty for depositors, who had entrusted their savings and financial security to the bank. The House expressed concern that the current compensation scheme, which limits payment to N5 million, is inadequate to alleviate the substantial losses experienced by depositors.
The House mandated its Committee on Banking Regulations to promote public awareness and education campaigns to inform citizens about the risks associated with banking and the importance of diversifying their financial holdings. The Committee is also tasked with ensuring that the CBN and NDIC are held accountable for their regulatory oversight and that depositors’ interests are protected.
The House’s resolution comes after the CBN revoked Heritage Bank’s license on June 3, 2024, citing violation of Section 12 (1) of the Banks and Other Financial Institutions Act (BOFIA), 2020. The NDIC has since initiated the liquidation process, but depositors with funds exceeding N5 million will only receive liquidation dividends after the realization of the bank’s assets and retrieval of debts owed to the bank.
The House asked the Nigerian Deposit Insurance Corporation (NDIC) and other pertinent authorities to carefully reassess the current compensation scheme, with a view to offering more meaningful relief to depositors who have experienced substantial financial losses.
They also want the Nigerian Deposit Insurance Corporation (NDIC) to conduct a comprehensive review of its operations and the effectiveness of its mandate to ensure that it is adequately equipped and resourced to fulfill its role as deposit insurer and investor of failed banks.
The House asked the federal government of Nigeria on establishment of a robust and well-funded depositors’ protection fund to provide greater financial security and assurance for depositors in the event of bank failures, and to facilitate timely and fair compensation for affected depositors.
It mandates it’s Committee on Banking Regulations on promoting public awareness and education campaigns to inform citizens about the risks associated with banking and the importance of diversifying their financial holdings with a view to empowering depositors to make informed decisions about their banking relationships and safeguard their financial well-being.
He said given recent developments surrounding the Heritage Bank, the government expresses profound and unwavering concern for the welfare and prosperity of its treasured citizens, particularly depositors who have placed their trust in financial institutions, emphasizing the critical need for strong regulatory oversight to protect their interests.
