The Chairman of the Economic and Financial Crimes Commission, Mr. Ola Olukoyede, has cautioned Nigerian banks against granting loans without credible collateral, warning that such practices often result in insider abuse and non-performing loans.
Olukoyede gave the warning recently when he received the Chief Audit Executive of First Bank Plc, Mufutau Abiola, who led a delegation on a courtesy visit to the Lagos Zonal Directorate 2 of the Commission in Ikoyi.
According to a statement on the agency’s X handle on Monday, the EFCC boss spoke through the Acting Zonal Director, Lagos Zonal Directorate 2, Ikoyi, Bawa Kaltungo.
He expressed concern over banks’ lending practices, noting that loans backed only by personal guarantees, including those of top executives, are inadequate and put depositors’ funds at risk.
“We have issues with banks’ mode of giving loans. The process often shows insider abuse,” he said.
He stressed that banks should desist from issuing loans without visible or credible collateral, adding 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 of depositors’ funds, and that granting loans without adequate collateral amounts to “tampering with depositors’ funds.”
He also urged banks to strengthen due diligence processes on customers to prevent loan defaults.
According to him, “Even in situations where you outsource due diligence, there must be a clause of liability.”
Reaffirming the Commission’s commitment to continued collaboration with the bank in tackling financial crimes, Olukoyede urged financial institutions to promptly release staff when they are invited for investigations involving alleged financial misconduct.
“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 aimed at strengthening existing collaboration between the bank and the Commission.
He also urged the EFCC to expedite investigations into cases involving its staff and others, adding that a designated team in his bank handles requests from the Commission.
