The Executive Chairman of the Economic and Financial Crimes Commission (EFCC), Mr. Ola Olukoyede, has cautioned Nigerian banks against the issuance of loans without credible collateral.
He noted that such practices frequently facilitate insider abuse and contribute to the growing volume of non-performing loans (NPLs).
Olukoyede made this known during a courtesy visit by the Chief Audit Executive of First Bank Plc, Mufutau Olawale Abiola, to the Commission’s Lagos Zonal Directorate 2 in Ikoyi.
Represented by the Acting Zonal Director, Assistant Commander of the EFCC (ACE 1) Bawa Usman Kaltungo, Olukoyede expressed deep concern over current lending methodologies.
He argued that loans backed merely by personal guarantees including those provided by high-ranking executives are insufficient and expose the savings of ordinary depositors to unnecessary risk.
The EFCC boss emphasized that banks must stop the practice of top-down lending, asserting that a personal guarantee does not constitute valid security and that verifiable collateral is the only way to effectively reduce loan defaults.
Olukoyede further reminded financial institutions of their roles as custodians, stating that tampering with depositors’ funds by issuing poorly secured loans is a violation of public trust.
He urged banks to adopt more rigorous due diligence processes for all customers.
He also stressed that even in cases where due diligence is outsourced to third parties, banks must ensure there are clear clauses of liability to protect against negligence or fraud.
The Chairman also reaffirmed the Commission’s commitment to collaborating with the banking sector to eradicate financial crimes but insisted on transparency and cooperation.
He urged bank managements to promptly release staff members for questioning when invited by the Commission, particularly in instances where insider connivance is suspected.
Responding to these remarks, Mr. Abiola thanked the EFCC for its engagement and noted that First Bank has established a dedicated team to handle the Commission’s requests, while also appealing for the expedited investigation of pending cases.
