EFCC sends warnings to Nigerian banks

The Executive Chairman of the Economic and Financial Crimes Commission, EFCC, Mr. Ola Olukoyede, has cautioned Nigerian banks against granting loans without credible collateral, warning that such practices often lead to insider abuse and non-performing loans.

Olukoyede issued the warning recently when he received the Chief Audit Executive of First Bank Plc, Mufutau Olawale Abiola, who led a delegation on a courtesy visit to the Lagos Zonal Directorate 2 of the Commission in Ikoyi.

Speaking through the Acting Zonal Director, Lagos Zonal Directorate 2, Ikoyi, Assistant Commander of the EFCC, ACE 1 Bawa Usman Kaltungo, Olukoyede expressed grave concerns over how banks in the country grant loans, noting that loans backed only by personal guarantees, including those of top executives, are inadequate and put depositors’ funds at risk. He said: “We have issues with banks’ mode of giving loans. The process often shows insider abuse.”

While emphasizing that banks should desist from issuing loans without visible or credible collateral, he added that “Top-down loans are not secured. You cannot give a loan based solely on the personal guarantee of the Chief Executive. This is not security. Banks must not issue loans without verifiable collateral. If there is proper collateral for loans obtained by bank customers, this will reduce the rate of non-performing loans.”

He further warned that a bank is only a custodian, and that giving loans without adequate collateral “amounts to tampering with depositors’ funds.”

He also urged banks to implement measures, including thorough due diligence on its customers, to prevent loan defaults.

According to him, “Even in situations where you outsource due diligence, there must be a clause of liability,” he said.

Reaffirming the Commission’s commitment to continued cooperation with the bank in tackling financial crimes, he urged the bank to release its staff promptly when invited during investigations of alleged financial crimes.

“When we invite your staff, especially where insider connivance is suspected, you must release them so we can jointly fight economic and financial crimes. We must work together to stay ahead of criminals. Let me add that where money is, that is where people’s hearts are. Most of the time, we escalate issues to foreign security agencies as may be necessary,” he added.

Earlier, Abiola expressed gratitude to the EFCC leadership for the engagement, noting that the visit was intended to strengthen the existing collaboration between the bank and the Commission.

While urging the EFCC to expedite investigations into cases involving its staff and others, Abiola also disclosed that a designated team in his bank handles requests from the EFCC.