1.1. A lot of questions have been asked by a number of persons as to how much a customer of a bank can claim in respect of their money (deposits) in banks when a certain bank fails or its license is revoked by a relevant authority or payment to its depositors is suspended; as well as questions on time limit to claim deposits in failed banks in such circumstances. The answer to these questions and other necessary adumbrations relating to the said answer are what would be discussed in this write-up in a very simple and comprehensible way.
1.2. In understanding this topic, it is to be understood that the legal framework directly connected to this topic is the Nigeria Deposit Insurance Corporation Act, 2023 (The Act) which in its Section 1(1) established the Nigeria Deposit Insurance Corporation (the Corporation). It is the Nigeria Deposit Insurance Corporation that is by Section 4 of the Act saddled with the task to, among other functions, guarantee the payment of depositors of insured institutions.
1.3. For a better comprehension, by virtue of Section 99 of The Act, one would understand that: Deposit is money lodged by depositors with any insured institution principally for safe keeping or earning interest, and except for such money expressly excluded by the Act, it includes any money in an insured institution which is described as deposit by the Corporation; Insured institution means all financial institutions in Nigeria licensed or authorized to accept deposits from the public in accordance with the provisions of Banks and Other Financial Institutions Act, 2020; Bank means any person who is licensed by the Central Bank of Nigeria to carry on the business of acceptance of deposit.
1.4. Flowing from the foregoing, the Corporation can only guarantee deposits in Insured Institutions and not otherwise. Banks are therefore insured institutions and deposits in Banks can be under the payment guarantee of the Corporation.
1.5. Going forward, a just reading of Section 4 of the Act would show that the Corporation can only guarantee payments to depositors of insured institutions within the scope of the law and up to the maximum payment as provided by the law. It can equally be said that the Corporation cannot guarantee ALL kinds of deposit in an insured institution, the Corporation can only guarantee insurable deposits in an insured institution.
1.6. From the provisions of Section 22 of the Act, insurable deposits are all deposits of a licensed bank or any other licensed deposit-taking financial institution, with the exception of:
(a) Insider deposits, that is, deposits of staff including directors of the insured institutions;
(b) Counterclaims from a person who maintains both deposit and loan account, the former serving as a collateral for the loan;
(c) Inter-bank placements; or
(d) Such other deposits as may be specified by the Board.
1.7. In other words, any money in the Bank which does not qualify to be a deposit following from the definition of deposit as held out in paragraph 1.3 above or which though qualifies as deposit but is excluded as an insurable deposit in paragraph 1.7 above, cannot be said to be subject of guarantee or payment by the Corporation.
1.8. In the Part II to this write-up, we shall see the maximum sum to be claimed by a customer (depositor) of a failed Bank, among other topical issues.
