The Nigeria Deposit Insurance Corporation (NDIC) has urged Nigerians to keep their savings in licensed and regulated financial institutions, warning that the growing attraction of unusually high investment returns continues to expose individuals and businesses to potentially devastating losses.
Managing Director and Chief Executive of the NDIC, Thompson Oludare Sunday, gave the warning during the Corporation’s Special Day at the 21st Abuja International Trade Fair, where he stressed that depositors must verify the regulatory status of institutions before entrusting them with their money.
Sunday expressed concern that some Nigerians continue to keep substantial amounts outside the formal financial system or place their savings with unlicensed fund managers offering extraordinary returns.
He warned that the repeated collapse of Ponzi schemes has demonstrated the financial and emotional consequences of putting savings into unregulated investment arrangements.
‘Verify Before Committing Your Money’
The NDIC boss urged Nigerians to exercise greater caution when confronted with investment opportunities promising returns that appear significantly higher than normal market conditions.
“If an investment promise sounds too good to be true, Nigerians should pause, ask questions and verify before committing their money,” Sunday said.
The warning is particularly significant as digital platforms and social media make it easier for investment schemes to reach potential investors.
While technology has widened access to legitimate financial products, it has also provided new channels through which unregulated operators can solicit funds.
For depositors, the distinction between a regulated institution and an informal investment platform can become crucial when problems occur.
NDIC Insurance Covers More Than 98% of Depositors
Sunday said the Corporation had strengthened depositor protection by increasing deposit insurance coverage in 2024.
Under the revised limits, the maximum insured deposit stands at ₦5 million per depositor for Deposit Money Banks and Mobile Money Operators, while depositors with Microfinance Banks, Primary Mortgage Banks and Payment Service Banks are covered up to ₦2 million.
According to the NDIC, the enhanced limits provide full insurance coverage for more than 98 per cent of depositors across insured institutions.
The insurance system is designed to protect depositors when an insured institution fails.
Depositors do not need to register separately or pay a fee to receive the protection. Deposits held in qualifying CBN-licensed institutions are automatically covered under the NDIC framework.
Depositors Above Insurance Limit Can Receive Liquidation Dividends
For customers whose balances exceed the maximum insured amount, the Corporation said recovery does not necessarily end with payment of the insured portion.
NDIC can subsequently pay liquidation dividends from money recovered from debtors of failed institutions and proceeds generated from disposing of their assets.
The Corporation said its objective is to prevent the failure of an insured financial institution from destroying public confidence in the wider banking system.
Technology Speeds Up Depositor Payments
NDIC is also increasing its use of technology to shorten the time required to reimburse customers when banks fail.
The Corporation said it now uses tools including the Bank Verification Number, Single Customer View framework and Nigeria Inter-Bank Settlement System infrastructure to identify and reimburse verified depositors.
According to the NDIC, verified customers of failed banks can now receive their insured deposits within days of a bank’s closure, moving the claims process away from the more cumbersome manual procedures used previously.
The system can use a depositor’s BVN to identify another bank account into which the insured amount can be paid.
NDIC Shifts From Claim Payer to ‘Risk Minimiser’
Beyond reimbursing depositors after failures, Sunday said the Corporation was strengthening its role as a “Risk Minimiser” within Nigeria’s financial system.
That approach involves identifying vulnerabilities before they develop into wider problems and working with other regulators to prevent institutional distress from becoming a systemic crisis.
NDIC said measures supporting the strategy include Risk-Based Supervision, an enhanced Differential Premium Assessment System, the Single Customer View Framework and Bank Liquidation Management System.
The Corporation also works with the Central Bank of Nigeria and other institutions within the country’s financial safety-net framework.
NDIC Launches Digital Verification Tools
The regulator has also upgraded its digital services to make it easier for Nigerians to determine whether financial institutions are insured.
Its upgraded website, launched on September 19, includes tools for checking insured institutions, filing claims, reporting failed banks and accessing information on deposit-insurance coverage.
For Nigerians considering where to keep their savings, the Corporation’s message is therefore centred on verification.
Promises of exceptionally high returns can be attractive, particularly during periods when households are seeking ways to protect their money against rising costs.
But higher promised returns can also carry substantially higher risks — and funds placed with unlicensed schemes do not receive the same protection available within the regulated banking system.
The NDIC is consequently urging Nigerians to verify first, invest cautiously and ensure that institutions entrusted with their savings operate within Nigeria’s regulated financial system.
