Ola Olukoyede, The Chairman of the Economic and Financial Crimes Commission (EFCC), has cautioned Nigerian banks against granting loans without credible collateral, warning that such practices often lead to insider abuse and rising non-performing loans.
Olukoyede gave the warning during a courtesy visit by the Chief Audit Executive of First Bank of Nigeria, Mufutau Abiola, and his delegation to the Lagos Zonal Directorate 2 of the commission in Ikoyi.
Bawa Kaltungo, speaking through the Acting Zonal Director, the EFCC boss expressed concern over lending practices in the banking sector, particularly loans backed solely by personal guarantees.
“We have issues with banks’ mode of giving loans. The process often shows insider abuse,” he said.
He stressed that loans approved without tangible collateral expose depositors’ funds to risk, noting that personal guarantees, even from top executives, do not constitute adequate security.
“Banks must not issue loans without verifiable collateral. If there is proper collateral, it will reduce the rate of non-performing loans,” Olukoyede said.
He added that banks act as custodians of depositors’ funds and warned that issuing unsecured loans amounts to “tampering with depositors’ funds.”
The EFCC chairman also urged financial institutions to strengthen due diligence processes, including ensuring accountability when such processes are outsourced.
He further called on banks to cooperate with investigations by promptly releasing staff members when invited over suspected 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,” he added.
Earlier, Abiola commended the EFCC for the engagement, noting that the visit was aimed at strengthening collaboration between the bank and the commission, while also urging faster resolution of investigations involving banking personnel.
