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The short answer
The Nigeria Deposit Insurance Corporation (NDIC) was set up by Decree No. 22 of 1988 and began operations in 1989, after a run of bank failures had left depositors unprotected. It now works under the NDIC Act 2023, insures deposits in banks, microfinance banks, primary mortgage banks and payment service banks, and in 2024 raised cover to ₦5 million per depositor at commercial banks and ₦2 million at microfinance and mortgage banks.
The NDIC insures deposits, supervises insured banks alongside the CBN, and acts as liquidator when a bank's licence is revoked. This page sets out its history. For today's cover, see NDIC deposit insurance limits explained.
NDIC timeline (as of October 2026)
| Year | Event |
|---|---|
| 1988 | NDIC established by Decree No. 22 of 15 June 1988 |
| 1989 | NDIC begins operations; initial cover ₦50,000 per depositor |
| 1991 | Banks and Other Financial Institutions Act strengthens CBN and NDIC powers over failing banks |
| 1990s | Wave of bank failures; NDIC liquidates dozens of banks, including a large group closed in January 1998 |
| 2006 | NDIC Act 2006 replaces the 1988 Decree |
| 2006 | NDIC liquidates 14 banks that failed the ₦25 billion consolidation rule |
| 2010s | Cover raised to ₦500,000 for deposit money banks and ₦200,000 for microfinance and mortgage banks |
| 2010s | Pass-through deposit insurance introduced for mobile money wallet holders |
| 2023 | NDIC Act 2023 signed, repealing the 2006 Act |
| 2024 | Cover raised to ₦5 million for deposit money banks and ₦2 million for microfinance and primary mortgage banks |
| June 2024 | CBN revokes Heritage Bank's licence; NDIC appointed liquidator and begins paying insured depositors |
Why deposit insurance came in 1988
Before 1988, depositors in a failed Nigerian bank had no formal protection and often lost everything. A string of failures among indigenous banks from the 1930s to the 1950s, and the rapid growth of new banks after the 1986 Structural Adjustment Programme, made a safety net urgent. The NDIC is funded mainly by premiums that insured institutions pay each year, calculated on their deposits, which build up a fund used to pay depositors when a bank fails. It is jointly owned by the CBN and the Federal Ministry of Finance. The Decree gave the NDIC four jobs that it still has: insuring deposits, supervising insured institutions, managing failed banks and liquidating them.
The 1990s and the first big test
Many of the banks licensed after 1986 were thinly capitalised and badly run. Insider lending, fraud and a weak economy led to widespread distress through the 1990s. The NDIC took over or liquidated a large number of banks, the biggest single action being the closure of a group of distressed banks in January 1998. Payments to depositors were limited to the insured amount, with further payments only as assets were sold, which is why many depositors from that era recovered only part of their money.
Consolidation, crisis and new laws
The 2004–2005 consolidation left 14 banks to be liquidated by the NDIC in 2006 (listed in our 2005 consolidation explainer). The NDIC Act 2006 gave the corporation a modern legal basis and allowed it to cover more types of institution. During the 2009 crisis, the CBN and NDIC worked together on rescues, and the NDIC took part in creating bridge banks in 2011. Under the NDIC Act 2023, the corporation gained stronger powers to resolve failing banks early, including through bridge banks and purchase-and-assumption deals, and the law set out clearer rules for funding and claims.
Who is covered today
- Deposit money banks (commercial, merchant and non-interest banks): up to ₦5 million per depositor per bank.
- Microfinance banks and primary mortgage banks: up to ₦2 million per depositor per bank.
- Payment service banks and mobile money: covered under pass-through arrangements, where the NDIC treats each customer's balance held at a bank as insured.
- Cover is per depositor per bank, so balances held at different banks are each insured separately up to the limit.
- Not covered: investments such as shares, treasury bills and pension funds.
How a payout works
- The CBN revokes the bank's licence and appoints the NDIC as liquidator.
- The NDIC takes over the bank's records and identifies depositors, using BVN to match each depositor to accounts at other banks.
- Insured sums, up to the limit, are paid by transfer into the depositor's account at another bank. Depositors without a linked account are asked to submit a claim with identification.
- Balances above the limit are paid later as liquidation dividends, from the sale of the failed bank's assets and the recovery of its loans. These can take years and may not be paid in full.
Recent failures and payouts
The NDIC also pays depositors of failed microfinance banks, which it does regularly as licences are revoked. The most prominent recent case is Heritage Bank, whose licence the CBN revoked on 3 June 2024. The NDIC began paying insured depositors soon after, using BVN-linked accounts to transfer funds to depositors' accounts at other banks, and announced further payments to uninsured depositors as assets were recovered. Our guide on whether your money is safe in a fintech explains how insurance works with app-based accounts.
How we put this together
Dates and cover limits are from NDIC annual reports and press releases, the NDIC Acts of 2006 and 2023 and CBN statements. The initial ₦50,000 cover is from the 1988 Decree. We have not given a full table of every change to cover, because the intermediate steps are reported differently in different NDIC publications. Readers needing a complete series should use the NDIC's annual reports.
Questions people ask
When was NDIC established?
By Decree No. 22 of 15 June 1988; it began operations in 1989.
How much does NDIC insure in Nigeria?
Up to ₦5 million per depositor per commercial, merchant or non-interest bank, and ₦2 million per depositor at microfinance and primary mortgage banks, under limits raised in 2024.
What law governs NDIC now?
The NDIC Act 2023, which repealed the NDIC Act 2006.
Does NDIC cover fintech wallets?
Balances held at licensed banks on behalf of mobile money customers are covered through pass-through deposit insurance. Check whether your provider holds your money with an NDIC-insured bank.
Sources
- Nigeria Deposit Insurance Corporation · accessed Oct 2026
- Central Bank of Nigeria: circulars, press releases and publications · accessed Oct 2026
- NDIC Act 2006 and 1988 Decree (Laws of the Federation, PLAC) · accessed Oct 2026
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