The Nigeria Deposit Insurance Corporation has raised alarm over debtors of failed banks who are refusing to repay outstanding loans, using asset concealment, legal delays and intimidation to frustrate recovery efforts, the NDIC said. Ogungbemi Theophilus, director of the corporation's Asset Management Department, said the behaviour was undermining attempts to recover funds for depositors and delaying payouts to customers of liquidated financial institutions. Speaking at a stakeholders' seminar in Abuja on Monday, Theophilus explained that some borrowers believed their obligations ended when a bank's licence was revoked. "Some debtors of failed banks believe that because a bank's licence is revoked, he is not obliged to fulfil his responsibilities anymore. They hide assets. They frustrate service. Employ delay tactics in court. Sometimes, they try to intimidate," he said.
The NDIC director outlined how delays damage the liquidation process. When loans go unpaid and physical assets remain undisposed, their value falls over time. "Buildings left unoccupied for extended periods depreciate, while equipment deteriorates and outstanding loans become increasingly difficult to recover. Every delay slows payment to depositors," Theophilus said. He noted that recovering outstanding loans was among the most challenging aspects of bank liquidation, particularly when borrowers had failed to honour obligations before their banks lost their operating licences. The Asset Management Department is responsible for managing loans, physical assets and investments of closed deposit money banks, primary mortgage banks and microfinance banks, and must recover outstanding loans, dispose of properties and convert recovered assets into cash to settle uninsured depositors.
The NDIC said its ability to compensate depositors whose balances exceeded insured limits depended on successful recovery efforts. The corporation covers deposits up to N5m per depositor per bank for deposit money banks, non-interest banks and mobile money operators, and up to N2m for microfinance banks, primary mortgage banks and payment service banks. Approximately 99 per cent of depositors are fully protected under these limits, according to the NDIC. For customers with balances above the insured amounts, recovery depends on liquidation dividends from realised assets and recovered loans.
The NDIC conducted public auctions in November to dispose of physical assets from three banks in liquidation: Union Homes Savings and Loans, Heritage Bank, and Resort Savings and Loans. Theophilus warned that recovery costs must not exceed the value of recovered assets, stating: "If it costs us N10m to recover N8m, the depositor has lost." He also cautioned professionals against insider dealing, undervaluation, collusion with buyers and diversion of proceeds. The NDIC is developing a comprehensive Asset Management Policy to strengthen asset identification, documentation, valuation and disposal procedures, and plans to deepen collaboration with auctioneers, valuers and other professionals to improve outcomes. Theophilus said the Abuja workshop was part of three stakeholder seminars scheduled for different regions to strengthen professional relationships and improve recovery results.
Depositors with uninsured balances in failed banks face delays in receiving payment as long as loan recovery and asset disposal efforts are hampered, with recovery success ultimately determining how much they can be compensated beyond the insured portion of their deposits.