Ponzi Schemes: NDIC Unveils Money Traps Nigerians Must Avoid
- NDIC warns Nigerians against unlicensed fund managers and Ponzi schemes promising extraordinary returns
- Deposit insurance covers up to ₦5 million at banks and mobile money operators, and ₦2 million at selected institutions
- Digital verification systems aim to speed up depositor claims, while updated bank records help ensure smooth payments
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Pascal Oparada is a journalist with Legit.ng, covering technology, energy, stocks, investment, and the economy for over a decade.
The Nigeria Deposit Insurance Corporation (NDIC) has warned Nigerians against handing their savings to unlicensed fund managers and Ponzi scheme operators, cautioning that promises of extraordinary returns can end in devastating losses.
Source: Original
The corporation urged citizens to scrutinise investment offers before committing money, particularly where operators lack regulatory backing or advertise returns that appear unrealistic.
Its Managing Director and Chief Executive Officer, Thompson Sunday, issued the warning in an address at the NDIC Special Day during the 21st Abuja International Trade Fair on Wednesday, September 30, 2026. NDIC
For households and small businesses, the message was urgent: verify who is holding your money before placing hard-earned savings beyond the protection of regulated financial institutions.
Unrealistic returns can become costly traps
Sunday expressed concern that some Nigerians continue to keep substantial funds outside the formal banking system or entrust their resources to unlicensed investment operators.
“There are still Nigerians who keep substantial funds outside the formal banking system or entrust their savings to unlicensed fund managers, attracted by promises of extraordinary and unrealistic returns,” he stated.
He said repeated Ponzi scheme collapses had exposed the enormous financial and emotional damage associated with unregulated investments.
Such losses can strip families of savings accumulated over years and leave entrepreneurs without the working capital needed to sustain their businesses.
Sunday urged Nigerians to pause, ask questions and verify investment promises before transferring funds. The attraction of quick profits, he stressed, should never replace basic checks on an operator’s legitimacy.
What NDIC deposit insurance covers
The NDIC chief highlighted the protection available through insured financial institutions, explaining that the corporation provides a safety net when an insured institution fails, according to a report by Punch.
Following a coverage increase introduced in 2024, the maximum insured amount rose to ₦5 million per depositor for Deposit Money Banks and Mobile Money Operators.
For Microfinance Banks, Primary Mortgage Banks and Payment Service Banks, the maximum coverage is ₦2 million per depositor.
According to Sunday, these limits fully cover the balances of more than 98 per cent of bank depositors nationwide.
However, deposit insurance limits matter. Depositors with balances above the applicable ceiling receive additional payments through liquidation dividends funded by debt recoveries and asset sales. Such payments depend on recoveries and should not be confused with an immediate guarantee of full repayment.
Faster claims and updated bank records
Sunday said the corporation had adopted digital systems to accelerate payments, reducing reliance on cumbersome physical verification and paperwork.
These include the Single Customer View framework, Bank Verification Numbers and payment infrastructure provided by the Nigeria Inter-Bank Settlement System.
He said the systems enable verified depositors to receive payments within days of a bank closure.
The corporation also unveiled an upgraded website featuring tools for submitting claims, checking bank statuses and accessing guidance through an AI-powered virtual assistant.
Source: Getty Images
Sunday urged customers to keep their account information and BVNs consistent across institutions to support seamless verification.
Linking depositor confidence to Nigeria’s ambition of becoming a $1 trillion economy by 2030, he stressed that protecting savings remains essential to financial stability and sustainable business growth.
Six major bank closures and how to recover your money
Legit.ng earlier reported that customers with money in failed Nigerian banks may still recover their savings, but the route to repayment depends on whether their deposits moved to another institution or remained subject to liquidation.
Official records identify six commercial bank licence revocations from 2010 onwards: Afribank, Bank PHB, Ponzi Schemes: NDIC Unveils Money Traps Nigerians Must Avoid Bank, African International Bank, Skye Bank and Heritage Bank. Hundreds of smaller lenders also lost their licences during the period.
Source: Legit.ng
