NDIC Raises Alarm Over Debtors’ Tactics To Evade Loan Repayment

The Nigeria Deposit Insurance Corporation (NDIC) has raised concerns over the failure of some borrowers of defunct banks to repay outstanding loans.

It alleged that they are obstructing recovery efforts by hiding assets, exploiting court processes and intimidating officials.

The corporation warned that the actions are hampering its efforts to retrieve funds owed to failed financial institutions, thereby delaying the settlement of outstanding claims belonging to depositors.

The Director of the Asset Management Department of the NDIC, Ogungbemi Theophilus, disclosed this on Monday at the Stakeholders’ Seminar and Public Relations Workshop in Abuja.

Speaking on the difficulties associated with recovering assets from failed banks, Theophilus said some borrowers wrongly assume that the revocation of a bank’s operating licence automatically frees them from their repayment obligations.

He explained that some debtors deliberately conceal their properties, frustrate recovery proceedings, resort to prolonged court cases and sometimes use intimidation to discourage the corporation from pursuing outstanding debts.

According to him, the NDIC remains committed to carrying out its recovery responsibilities professionally despite the obstacles.

He described loan recovery as one of the most challenging aspects of liquidating failed banks, noting that borrowers who defaulted while the institutions were operational often become even more difficult to pursue after their closure.

The director also warned that prolonged recovery processes and delays in selling physical assets could erode their market value, reducing the funds available to compensate affected depositors.

He explained that properties left unused for long periods lose value, while equipment deteriorates and unpaid loans become increasingly difficult to recover.

Theophilus stressed that delays in retrieving these assets directly affect the corporation’s ability to pay depositors awaiting their outstanding funds.

He said the Asset Management Department oversees loans, properties and investments belonging to failed deposit money banks, primary mortgage banks and microfinance banks.

Its responsibilities, he explained, include recovering unpaid loans, selling physical properties and investments, and converting the proceeds into cash for the settlement of uninsured depositors.

He noted that the amount the corporation can pay customers whose deposits exceed the insured limits largely depends on how effectively these assets and outstanding debts are recovered.

Theophilus explained that depositors of deposit
money banks, non-interest banks and mobile money operators are covered by insurance of up to N5m per depositor per bank, while customers of microfinance banks, primary mortgage banks and payment service banks have coverage of up to N2m.

According to him, the existing insurance limits provide full protection for about 99 per cent of depositors. However, customers with balances above the stipulated coverage must rely on liquidation dividends to recover the uninsured portion of their deposits.

He explained that payments beyond the insured amounts would depend on proceeds generated from the sale of recovered assets and the collection of outstanding loans.

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

The banks involved were Union Homes Savings and Loans, Heritage Bank and Resort Savings and Loans, with the auction exercises conducted across Lagos, Taraba and Adamawa states.

He said the sales were organised by the Asset Management Department through appointed auctioneers, using a competitive sealed-bidding process.

Theophilus further emphasised the need to control the expenses associated with debt recovery, warning that the cost of retrieving outstanding loans must not exceed the value of the assets being recovered.

He said excessive recovery expenses would ultimately reduce the funds available to depositors, making it necessary for the corporation to maintain strict control over costs, timelines and reporting.

He also warned professionals involved in the recovery and disposal of failed banks’ assets against unethical practices, including insider dealings, deliberate undervaluation of properties, collusion with prospective buyers and diversion of sale proceeds.

The director maintained that the corporation would not tolerate any activities capable of depriving depositors of funds due to them.

He disclosed that the NDIC was working on a comprehensive Asset Management Policy to improve the identification, documentation, valuation and disposal of assets, while strengthening accountability throughout the recovery process.

He added that the corporation planned to strengthen its partnerships with auctioneers, valuers, sales agents, surveyors and other professionals to improve debt recovery and speed up the payment of depositors’ claims.

Theophilus explained that the Abuja workshop was one of three stakeholder engagements scheduled to take place in Abuja, Enugu and Lagos to address operational difficulties, improve professional collaboration and strengthen asset recovery efforts.

He expressed confidence that stronger cooperation among the relevant stakeholders would improve recovery outcomes and help the corporation settle outstanding claims owed to depositors of failed banks.