ABUJA, Nigeria (VOICE OF NAIJA)-The Chairman of the Economic and Financial Crimes Commission, Mr. Ola Olukoyede, has warned Nigerian banks against approving loans without credible collateral, noting that such practices often lead to insider abuse and a rise in non-performing loans.
Olukoyede issued the warning during a recent meeting with 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 shared on the agency’s X handle on Monday, the EFCC chairman, represented by the Acting Zonal Director of Lagos Zonal Directorate 2, Ikoyi, Bawa Kaltungo, raised concerns about the lending culture in the banking sector.
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He emphasised that loans supported only by personal guarantees, even from top executives, are insufficient and expose depositors’ funds to risk.
“We have issues with banks’ mode of giving loans. The process often shows insider abuse,” he said.
He urged financial institutions to avoid granting loans without tangible and verifiable collateral, stressing 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.”
Olukoyede further cautioned that banks merely hold depositors’ funds in trust, adding that issuing loans without adequate backing amounts to “tampering with depositors’ funds.”
He also called on banks to reinforce their due diligence procedures to minimise the risk of loan defaults.
According to him, “Even in situations where you outsource due diligence, there must be a clause of liability.”
Reiterating the Commission’s readiness to collaborate with financial institutions in combating financial crimes, Olukoyede advised banks to promptly release staff invited for investigations, particularly in cases involving suspected insider involvement.
“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 thanked the EFCC leadership for the engagement, explaining that the visit was intended to strengthen the existing partnership between the bank and the Commission.
He also appealed to the EFCC to fast-track investigations involving the bank’s staff and other related cases, noting that a dedicated team within the bank handles requests from the Commission.