The Economic and Financial Crimes Commission (EFCC) has warned Nigerian banks to desist from granting loans without credible collateral, citing concerns over insider abuse and threats to financial stability.
The commission’s chairman, Ola Olukoyede, gave the warning during a courtesy visit by officials of First Bank of Nigeria Plc to the Lagos Zonal Directorate 2 office in Ikoyi.
Speaking through the acting Zonal Director, Assistant Commander Bawa Usman Kaltungo, Olukoyede expressed concern over lending practices in the banking sector, particularly loans backed only by personal guarantees, which he said expose depositors’ funds to significant risk.
“We have issues with banks’ mode of giving loans. The process often shows insider abuse,” he stated.
He criticised the practice of “top-down loans”, noting that they lack proper security and should be discouraged.
“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,” he said.
Olukoyede maintained that enforcing strict collateral requirements would help reduce the rising level of non-performing loans within the financial system.
He also stressed that banks act as custodians of depositors’ funds and must exercise due diligence in their operations.
“Giving loans without adequate collateral amounts to tampering with depositors’ funds,” he warned.
The EFCC boss further called for stronger due diligence frameworks, insisting that accountability must be ensured even when such processes are outsourced.
“Even in situations where you outsource due diligence, there must be a clause of liability,” he added.
Reaffirming the Commission’s commitment to collaboration, Olukoyede urged banks to cooperate fully with investigations, especially in cases involving suspected insider collusion.
“When we invite your staff, you must release them so we can jointly fight economic and financial crimes. We must work together to stay ahead of criminals,” he said, noting that cases may be escalated to foreign agencies when necessary.
Earlier, the Chief Audit Executive of First Bank, Mufutau Olawale Abiola, said the visit was aimed at strengthening collaboration with the EFCC.
He also called for expedited handling of cases involving the bank’s personnel and disclosed that a dedicated team has been established to manage requests from the commission.
The development highlights increasing regulatory pressure on Nigeria’s banking sector to strengthen risk management systems amid concerns over loan defaults and governance challenges.
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