Your bank is dead, your debt isn’t! NDIC fires warning at loan defaulters

The Nigeria Deposit Insurance Corporation (NDIC) has accused some borrowers of failed banks of deliberately obstructing efforts to recover billions of naira in unpaid loans through asset concealment, court delays and intimidation.

The corporation warned that the tactics were slowing the recovery of funds needed to compensate customers of liquidated financial institutions, particularly depositors whose balances exceed the insured limits.

The Director of the NDIC’s Asset Management Department, Ogungbemi Theophilus, raised the alarm on Monday at a stakeholders’ seminar and public relations workshop in Abuja.

He said some borrowers wrongly assumed that the revocation of a bank’s operating licence automatically freed them from their outstanding financial obligations.

“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. But we have to always do our job and professionally too,” he said.

Theophilus described loan recovery as one of the most challenging aspects of winding up failed financial institutions, noting that debts do not disappear simply because the lending bank has ceased operations.

“A loan that was not repaid when the bank was alive does not become easier to recover when the bank is dead,” he stated.

He warned that prolonged recovery processes could also erode the value of assets belonging to failed banks. According to him, unoccupied buildings deteriorate, equipment loses value and unpaid loans become increasingly difficult to recover as time passes.

“Every delay slows payment to depositors,” he warned.

The NDIC official explained that the Asset Management Department handles outstanding loans, properties and investments belonging to liquidated deposit money banks, primary mortgage banks and microfinance banks.

Its responsibilities include recovering unpaid loans, selling physical assets and investments, and converting the proceeds into cash for distribution to uninsured depositors.

He noted that customers of deposit money banks, non-interest banks and mobile money operators were insured up to N5m per depositor per bank, while the coverage for microfinance banks, primary mortgage banks and payment service banks stood at N2m.

According to him, the existing insurance limits provide full protection for approximately 99 per cent of depositors.

However, customers whose deposits exceed the applicable limits must depend on proceeds from asset sales and loan recoveries to receive their outstanding balances.

“For them, the insured payment is only the first instalment. The balance, the uninsured deposit, can only be paid as liquidation dividend, from the proceeds of the assets we are able to realise and the loans we are able to recover,” he explained.

Theophilus also disclosed that the corporation held public auctions on November 3 and 4, 2026, to sell physical assets belonging to three financial institutions undergoing liquidation.

The affected institutions were Union Homes Savings and Loans, Heritage Bank, and Resort Savings and Loans. The auctions, conducted through competitive sealed bidding, took place in Lagos, Taraba and Adamawa states.

He said the exercises were organised by the Asset Management Department and carried out through appointed auctioneers.

The director further cautioned against spending excessive amounts on debt recovery, insisting that the cost of recovering an asset must not exceed its actual value.

“If it costs us N10m to recover N8m, the depositor has lost. We must be disciplined about costs, timelines and reporting,” he said.

He also warned auctioneers, valuers and other professionals working with the corporation against insider dealings, undervaluation of properties, collusion with prospective buyers and diversion of sale proceeds.

“The Corporation has zero tolerance for insider dealing, under-valuation, collusion with buyers, diversion of proceeds, or any conduct that short-changes depositors,” he declared.

To strengthen its recovery operations, Theophilus said the NDIC was developing a comprehensive Asset Management Policy covering asset identification, documentation, valuation, disposal procedures and accountability.

He added that the corporation would improve its collaboration with auctioneers, valuers, surveyors, sales agents and other professionals to accelerate recoveries and facilitate the settlement of outstanding depositor claims.

The Abuja workshop was part of a series of three stakeholder engagements scheduled to hold in Abuja, Enugu and Lagos. The meetings are intended to address operational challenges, strengthen professional partnerships and improve the recovery of assets belonging to failed banks.

Theophilus maintained that more effective recovery efforts would ultimately enable the corporation to pay depositors awaiting their outstanding funds.