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The Nigeria Deposit Insurance Corporation (NDIC) has raised concerns over the refusal of some borrowers from failed banks to repay outstanding loans, accusing them of obstructing recovery efforts through asset concealment, prolonged legal proceedings and intimidation.
The corporation warned that these actions are undermining efforts to recover funds belonging to depositors and delaying the settlement of outstanding claims from customers of liquidated financial institutions.
The Director of the NDIC’s Asset Management Department, Ogungbemi Theophilus, disclosed this on Monday at the Stakeholders’ Seminar and Public Relations Workshop in Abuja, where he highlighted the challenges involved in recovering assets from failed banks.
NDIC identifies obstacles to failed bank loan recovery
Theophilus said some borrowers wrongly assume that the revocation of a bank’s operating licence absolves them of their outstanding financial obligations.
He explained that certain debtors deliberately conceal assets, frustrate the service of court processes and use legal delays to obstruct recovery proceedings. He added that some also resort to intimidation, making it more difficult for the corporation to recover funds.
“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.
According to the director, recovering unpaid loans remains one of the most challenging aspects of bank liquidation, particularly where borrowers had already defaulted before the affected institutions lost their licences.
He noted that the failure of a bank does not eliminate the repayment obligations of its borrowers, stressing that outstanding loans remain recoverable assets of the institution.
“A loan that was not repaid when the bank was alive does not become easier to recover when the bank is dead,” Theophilus stated.
Delayed recoveries threaten depositor repayments
The NDIC director warned that delays in recovering loans and disposing of physical assets could reduce their value and, consequently, the funds available for distribution to depositors.
He explained that buildings left unoccupied for extended periods lose value, equipment deteriorates, and unpaid loans become increasingly difficult to recover as time passes.
“Every delay slows payment to depositors,” he cautioned.
The Asset Management Department is responsible for managing loans, physical assets and investments belonging to closed deposit money banks, primary mortgage banks and microfinance banks.
Its responsibilities include recovering outstanding loans, disposing of properties and investments, and converting realised assets into cash to support the payment of uninsured depositors.
Theophilus explained that the corporation’s ability to settle claims above the insured limits depends significantly on how successfully it recovers outstanding loans and realises the assets of failed institutions.
NDIC outlines deposit insurance coverage
The director also explained the deposit insurance limits applicable to customers of different categories of financial institutions.
Under the existing coverage, depositors of deposit money banks, non-interest banks and mobile money operators are insured up to N5 million per depositor per bank. Customers of microfinance banks, primary mortgage banks and payment service banks are covered up to N2 million.
He said the current coverage fully protects approximately 99 per cent of depositors. However, customers whose balances exceed the applicable insured limits depend on liquidation dividends to recover the remaining funds.
“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 realize and the loans we are able to recover,” he explained.
This means that the recovery of outstanding loans and the successful disposal of failed banks’ assets remain important to the settlement of claims that fall outside the deposit insurance limits.
NDIC auctions assets of three banks in liquidation
As part of its asset realisation efforts, the corporation conducted public auctions on November 3 and 4, 2026, to dispose of physical assets belonging to three banks undergoing liquidation.
Theophilus identified the institutions as Union Homes Savings and Loans, Heritage Bank and Resort Savings and Loans. The auctions were conducted across Lagos, Taraba and Adamawa states.
He said the exercises were coordinated by the Asset Management Department and carried out by appointed auctioneers.
The director also emphasised the need to control the costs associated with debt recovery, warning that expenses must remain proportionate to the value of assets recovered.
“If it costs us N10m to recover N8m, the depositor has lost. We must be disciplined about costs, timelines and reporting,” he said.
He further warned professionals involved in asset recovery against insider dealing, deliberate undervaluation, collusion with buyers and diversion of proceeds.
“The Corporation has zero tolerance for insider dealing, under-valuation, collusion with buyers, diversion of proceeds, or any conduct that short-changes depositors,” Theophilus declared.
NDIC develops new asset management policy
To strengthen recovery processes and accountability, Theophilus disclosed that the NDIC was developing a comprehensive Asset Management Policy.
The proposed policy is expected to improve procedures for asset identification, documentation, valuation and disposal, while strengthening accountability throughout the recovery process.
The corporation also plans to deepen collaboration with auctioneers, valuers, sales agents, surveyors and other professionals involved in asset management and recovery.
According to Theophilus, stronger professional partnerships could improve loan recovery outcomes, accelerate the realisation of assets and support the settlement of outstanding depositor claims.
Stakeholder engagement to improve recovery outcomes
The Abuja workshop forms part of three stakeholder seminars scheduled to take place in Abuja, Enugu and Lagos.
The engagements are designed to identify operational challenges, strengthen working relationships with professionals and improve the effectiveness of the corporation’s asset recovery activities.
Theophilus maintained that cooperation among the NDIC, debt recovery professionals and other stakeholders would be critical to recovering funds from failed financial institutions.
For depositors awaiting the settlement of uninsured claims, the effectiveness of these recovery efforts remains particularly important, as the proceeds from recovered loans and realised assets determine the funds available for liquidation dividends.
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