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The short answer
When the CBN revokes a deposit-taking institution's licence, the NDIC is appointed liquidator and pays each depositor's insured deposits up to the limit for that type of institution, usually by transferring the money to another account linked to the depositor's BVN. Amounts above the limit are paid later, in instalments called liquidation dividends, from whatever the NDIC recovers by selling assets and collecting the failed bank's loans.
Who is covered
The NDIC, established in 1988 and now governed by the NDIC Act 2023, insures deposits at licensed deposit-taking institutions: deposit money banks (commercial, merchant and non-interest), microfinance banks, primary mortgage banks and payment service banks. Cover is per depositor, per institution, so money split across two banks is covered at each, but several accounts held by the same person at one bank are added together before the limit is applied. Deposit insurance is meant to protect ordinary savers and keep confidence in the system, which is why the limit is set to cover the full balance of most individual accounts rather than every naira of large corporate deposits. The current maximum for each category is on our page NDIC deposit insurance limits.
- Covered: savings, current and time deposits held by individuals and businesses at an insured institution.
- Generally not covered: money held in investments that are not deposits, such as shares, bonds or mutual funds, even if bought through a bank.
- Pass-through cover: where a licensed institution holds customers' money in a bank in the customers' names or on trust, the NDIC framework can extend cover to each underlying customer; check how your provider holds funds.
The sequence after a bank fails
- Licence revocation. The CBN revokes the institution's licence and announces it.
- Appointment of liquidator. The NDIC is appointed liquidator and takes control of the institution's records and assets.
- Verification. The NDIC reconciles depositors' balances from the bank's records and matches depositors using their BVN.
- Insured payout. Insured sums are paid, mainly by direct transfer to the depositor's other bank account linked to the same BVN.
- Claims for those without an alternative account. Depositors with no linked account elsewhere open one or submit claim documents through the NDIC's published process.
- Asset realisation. The NDIC sells assets, recovers loans and pursues debtors.
- Liquidation dividends. When recoveries allow, the NDIC declares dividends that pay uninsured depositors and other creditors a share of what is owed.
Worked example (example figures)
Assume, for illustration only, an insured limit of ₦5,000,000 for a deposit money bank. Funmi has ₦8,000,000 in a savings account and a ₦1,000,000 fixed deposit at a bank that fails, a total of ₦9,000,000.
| Step | Amount (example) |
|---|---|
| Total deposits at the failed bank | ₦9,000,000 |
| Insured portion paid early | ₦5,000,000 |
| Uninsured balance, claim in liquidation | ₦4,000,000 |
| First liquidation dividend declared at, say, 20% | ₦800,000 |
| Remaining claim after first dividend | ₦3,200,000 |
How much of the uninsured balance comes back, and when, depends entirely on the value of the failed bank's assets. Some liquidations pay out over many years.
What depositors should do
- Keep your BVN linked to at least one account at a different institution, with matching details, so an insured payout can land there.
- Keep statements and records of your balances.
- Use only NDIC channels and the claim forms it publishes; ignore anyone offering to speed up a payout for a fee.
- If you are owed more than the insured limit, watch for NDIC liquidation dividend announcements.
If you also owe the failed bank
A liquidation does not cancel loans. Borrowers must keep repaying, now to the NDIC as liquidator, and the NDIC actively pursues bad debts because recoveries fund the dividends owed to uninsured depositors. Where a customer both holds deposits and owes the failed bank money, the liquidator may take the loan into account when settling that customer's claim; ask the NDIC how it treats your accounts rather than stopping repayments.
Signs that a liquidation is real
Scammers often exploit bank failures by posing as NDIC staff or 'recovery agents'. A real liquidation is announced by the CBN and the NDIC on their official websites and in national newspapers. The NDIC does not charge depositors to receive insured sums, and it communicates claim procedures publicly. If anyone asks for a fee, your PIN or your online banking password to process a payout, it is fraud; see what to do after bank fraud.
How the NDIC funds payouts
Insured institutions pay annual premiums into the Deposit Insurance Fund. The NDIC uses that fund for payouts and recovers what it can from the failed bank's assets. It also examines insured institutions alongside the CBN to spot problems early, and it can support a failing bank's resolution by other means, such as arranging a purchase and assumption by a healthier bank.
Where Pryme fits
Naira deposits made through Pryme are held by Solid Allianze Microfinance Bank Ltd, which is licensed by the CBN and insured by the NDIC up to the applicable limit. See is your money safe in a Nigerian fintech and how Pryme secures accounts.
Questions people ask
How long does the NDIC take to pay depositors?
Insured sums are usually paid soon after the NDIC verifies records, by transfer to a BVN-linked account elsewhere. Uninsured amounts take longer and depend on recoveries.
What if I do not have another bank account?
Open one in your name with the same BVN, or follow the NDIC's claim procedure for the failed bank. The NDIC publishes guidance when it starts a liquidation.
Do I get back money above the insured limit?
Possibly, through liquidation dividends paid from asset sales and loan recoveries. The amount and timing are not guaranteed.
Are microfinance bank deposits insured?
Yes. Licensed microfinance banks are insured by the NDIC, with a limit for that category.
Sources
- Nigeria Deposit Insurance Corporation (NDIC) · accessed Oct 2026
- NDIC Act 2023 · accessed Oct 2026
- CBN: licence revocation notices · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.