EFCC warns banks against unsecured loans in Lagos – THISAGE

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

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

Speaking through the Acting Zonal Director, Lagos Zonal Directorate 2, Ikoyi, EFCC Deputy Commander, ACE 1 Bawa Usman Kaltungo, Olukoyede expressed grave concerns over the manner in which banks in the country give loans, stressing that loans only backed by personal guarantees, including those of senior executives, are inadequate and put depositors’ funds at risk. He said: “We have problems with the way banks give out loans. The process often shows internal abuse.”

While stressing that banks should refrain from issuing loans without visible or credible collateral, he added that “top-down loans are unsecured. It is not possible to grant a loan based solely on the personal guarantee of the CEO. This is not security. Banks should not issue loans without verifiable collateral. If there is adequate collateral for loans obtained by banks’ customers, this will reduce the rate of non-performing loans.”

He also warned that a bank is only a custodian and that granting loans without adequate collateral “is tantamount to tampering with depositors’ funds”. It also urged banks to implement measures, including thorough due diligence on their customers, to prevent loan defaults.

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

Reaffirming the Commission’s commitment to continue working with the bank in fighting financial crimes, he urged the bank to promptly release its staff when invited during investigations into alleged financial crimes.

“When you invite your staff, especially where internal connivance is suspected, you must release them so that we can fight economic and financial crimes together. We must work together to stay ahead of the criminals. Let me add that where the money is, that is where the hearts of the people are. In most cases, we refer the problems to foreign security agencies if necessary,” he added.

Abiola had earlier expressed gratitude to the EFCC leadership for the engagement, stressing that the visit was aimed at strengthening 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 EFCC inquiries.

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