…Faults CEOs’ Guarantees As Weak Security
…Slams Unsecured Loans, Insider Connivance
The Chairman of the Economic and Financial Crimes Commission, Ola Olukoyede, has warned Nigerian banks to desist from granting loans without verifiable collateral, describing the practice as a major driver of insider abuse and rising non-performing loans in the financial system.
Olukoyede issued the warning during a courtesy visit by the Chief Audit Executive of First Bank Plc, Mufutau Abiola, and his delegation to the Lagos Zonal Directorate 2 of the commission in Ikoyi.
Represented by the Acting Zonal Director, Lagos Zonal Directorate 2, Bawa Kaltungo, the EFCC boss criticised what he termed weak lending practices in the banking sector, particularly the reliance on personal guarantees by top executives to secure credit facilities.
“We have issues with banks’ mode of giving loans. The process often shows insider abuse,” he said.
He maintained that loans approved solely on the assurances of chief executives and other senior officials lack credible security and expose depositors’ funds to undue risk.
“You cannot give a loan based solely on the personal guarantee of a Chief Executive. This is not security. Banks must desist from issuing loans without visible and credible collateral,” Olukoyede said.
The anti-graft czar noted that strict adherence to collateral-backed lending would significantly curb the incidence of non-performing loans and restore confidence in the banking system.
He further stressed that banks operate as custodians of depositors’ funds, warning that granting unsecured loans amounts to a breach of public trust.
“Granting loans without adequate collateral is tantamount to tampering with depositors’ funds,” he added.
Olukoyede also charged financial institutions to strengthen internal controls and due diligence processes, including ensuring accountability in outsourced verification arrangements.
“Even where due diligence is outsourced, there must be clear liability clauses,” he said.
Reaffirming the commission’s commitment to tackling financial crimes, he urged banks to cooperate fully with investigations, especially in cases involving suspected insider collusion.
“When we invite your staff, particularly where insider abuse is suspected, they must be released promptly. We must work together to stay ahead of criminals,” he stated, adding that the EFCC would escalate cases to international security agencies when necessary.
Earlier, Abiola said the visit was aimed at deepening collaboration between First Bank and the EFCC in combating financial crimes.
He also appealed to the commission to expedite investigations involving bank personnel, noting that the bank had set up a dedicated team to handle EFCC-related matters.
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