The Nigeria Deposit Insurance Corporation (NDIC) has explained how depositors are compensated when banks fail, clarifying that insured payments are capped under existing laws.
Speaking during the 2026 budget defence before the House of Representatives Committee on Insurance and Actuarial Matters, NDIC Managing Director, Thompson Oludare Sunday, said depositors of failed deposit money banks are entitled to a maximum insured sum of ₦5 million, while customers of other institutions such as microfinance banks receive up to ₦2 million.
He explained that once a bank’s licence is revoked by the Central Bank of Nigeria, the institution is handed over to NDIC as liquidator. The corporation then pays the insured amount promptly, using depositors’ Bank Verification Numbers (BVN) to locate and credit their accounts in other banks without requiring physical visits.
Sunday added that deposits above the insured limit are not lost but are paid later through liquidation dividends, which depend on how much NDIC is able to recover from the sale of the failed bank’s assets, loan repayments by debtors and the realisation of investments.
The clarification comes amid lingering public concerns following the collapse of Heritage Bank, whose operating licence was revoked in June 2024. The development triggered anxiety among customers and renewed debate about the safety of bank deposits in Nigeria.
NDIC was established to protect depositors and maintain confidence in the banking system by providing deposit insurance and supervising insured institutions.
Under Nigeria’s deposit insurance framework, banks pay premiums to NDIC based on their risk profile, while depositors do not contribute directly.
In recent years, the insured deposit limit was increased from ₦500,000 to ₦5 million per depositor to reflect inflation and rising deposit values.
NDIC has maintained that more than 90 per cent of depositors in failed banks are usually fully reimbursed within days of licence revocation, as their balances fall within the insured threshold.
The House of Representatives Committee said the explanation was necessary to dispel misconceptions that NDIC guarantees all deposits without limit and to reassure Nigerians that mechanisms are in place to protect depositors when banks fail.
