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NDIC Writes CBN to Stop Bank Directors Accessing Loans

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NDIC Writes CBN to Stop Bank Directors Accessing Loans

By Modupe Gbadeyanka

A proposal to prevent directors of banks operating in Nigeria to have access to loans from lenders they are directly linked with has been forwarded to the Central Bank of Nigeria (CBN) by the Nigeria Deposit Insurance Corporation (NDIC).

Business Day reports that this recommendation has been largely welcomed by stakeholders in the financial sector in the country.

According to the NDIC, such directors should not sit on the boards of any financial institution if their loans become classified as non-performing.

An Associate Professor and Head of Banking and Finance department at the Nasarawa State University, told Business Day in an emailed response that, “It is indeed a welcome development. A lot of studies on bank failures have shown that loans to bank Directors played a significant role.

“So, the measure will not only check insider related dealings (including sharp forex practices by Bank Directors), it will also go a long way in reducing the high prevalence of non-performing loans (well above the regulatory threshold of 5 percent) in the banking industry.”

Managing Director of Afrinvest Securities Limited, Mr Ayodeji Ebo, also in an emailed response, noted that bank directors should not be totally barred from taking loans from their banks but a review of the credit policy on related party loans.

He said the CBN needs to come up with more stringent rules around the maximum loan limit directors can access, maximum tenor as well as minimum interest rate allowable.

The amount of loan should be capped as a proportion of their remuneration. The policy should also include related companies of the directors.

Also, loan documentation should be more stringent (like higher coverage ratio) to reduce the delinquency level.

“This will reduce loan losses, hence bolster the bottom lines of the banks”, Mr Ebo noted.

This infraction by bank directors has resulted in rising Non-Performing Loans (NPL) put at a record high of N1.85 trillion, about 10 percent above 5 percent industry regulatory threshold.

Managing Director/CEO of NDIC, Mr Umaru Ibrahim, had expressed displeasure over the rising trend in the level of banks’ non-performing loans (NPLs) in these financial institutions.

According to the agency, the 25 Deposit Money Banks (DMBs) had total loans portfolio of N18.53 trillion as at December 2016.

In microfinance banks, (MFBs), insiders/ directors consumed N68.25 billion or 35 percent loans while NPL remained as high as N87.75 billion or 45 percent. The NPLs indicated a classic case of over-lending, accumulated interests charges and poor corporate governance.

Similarly, the existing 42 primary mortgage banks (PMBs) had total deposits liabilities of N69 billion but with total loans portfolio of N94 billion, which indicated another case of over-lending, accumulated interests, poor corporate governance and high ratio of NPLs which stood at N51.7 billion or 55 percent out of which N42.3 billion or 45 percent were Insider related/Directors loans.

The resultant effects of these negative trends would be poor earnings and erosion of shareholders fund, Ibrahim, had said in his 2017 budget defence before House Committee on Insurance and Actuarial Matters.

Modupe Gbadeyanka is a fast-rising journalist with Business Post Nigeria. Her passion for journalism is amazing. She is willing to learn more with a view to becoming one of the best pen-pushers in Nigeria. Her role models are the duo of CNN's Richard Quest and Christiane Amanpour.

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Banking

Ecobank Assures Customers Sustained Excellent Service Delivery

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Ecobank Nigeria Jubril Mobolaji Lawal

By Aduragbemi Omiyale

Customers of Ecobank Nigeria Limited have been assured of excellent service delivery as the bank celebrates the annual customer service week.

“For us as a bank, we are inspired by your confidence and support to us in numerous ways. We are proud to celebrate your trust in our products and services and use and reliance on them across our touch points. Indeed, your word-of-mouth recommendations of them make us delighted to serve you better,” the Managing Director of the company, Mr Bolaji Lawal, said in a statement issued by the lender.

The financial institution lauded its customers over their continued patronage and dedication to the brand, assuring that the bank will continue to meet and surpass their expectations with product offerings.

Mr Lawal said customers’ loyalty to the bank over the years has made the Pan African bank one of the most preferred financial institutions in the country.

He pointed out that the choice of this year’s theme, Celebrate Service particularly resonates with Ecobank’s philosophy that service is a game changer.

“It is the reason we are constantly investing in our technology and equipping our staff with the requisite skills and resources to provide you with the relevant solutions you need and cutting-edge banking experience,” he stressed.

Mr Lawal reaffirmed the bank’s commitment to implement their feedbacks, noting that “we will continue to be relentless in our efforts to make financial services readily and easily accessible to you.

“As your preferred financial partner, we are happy to listen to you and remain committed to tailoring our products and services to suit your lifestyle and power your aspirations. We will continue to evolve with you and innovate our products and services to make banking a more rewarding experience for you.”

Customer Service Week is an international celebration of the importance of customer service and of the people who serve and support customers daily. It is celebrated annually during the first full week of October.  This year’s celebration holds from October 3 to 7.

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Banking

Unity Bank, Lagos Food Bank Address Hunger, Malnutrition

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Unity Bank Lagos Food Bank

By Aduragbemi Omiyale

Food items worth millions of Naira have been donated to Ogundimu Ilaje, a riverine community in the suburb of Lagos, by Unity Bank Plc and Lagos Food Bank.

No fewer than 150 cartons of food items tagged Unity Box of Hope were distributed to hundreds of households in the underserved community.

The gesture is a collaborative initiative to support and promote interventions addressing hunger and malnutrition in communities.

It is also part of the strategic Corporate Social Responsibilities (CSRs) of Unity Bank aimed at sustaining the improvement of health and social well-being of communities it operates.

The lender, in a statement, further said it supported the programme because its goals align with the Lagos Food Bank Initiative, a non-profit organisation committed to providing welfare programmes to indigent people.

The donation comes on the heels of the worsening economic situation in the country, especially with the soaring food inflation at 23.12 per cent as of August 2022, which has alleviated hunger in many households.

Addressing the beneficiaries at the venue of food distribution, Mr Hillary Oguebo, Unity Bank’s Head, Corporate Resources, said the bank, as an agric-focused financial institution, was fulfilling its core mandate in line with Bank’s drive for food security, adding that the Bank is pleased to donate the food items to the community to help ameliorate the impact of the rising cost of food on them.

“Unity Bank has a financing business model that is principally anchored, amongst others, on boosting agricultural production, and it is also useful for those who have not benefitted from the bank’s Agric financing package to receive direct food intervention as it is being done today.

“Due to a lot of factors, especially growing insecurity, food production has been impacted severely, leading to historical food inflation. That has left many households struggling and battling hunger. So, this is a thoughtful gesture that we hope to sustain to reach as many Nigerians who deserve this form of intervention at this critical period,” he stated.

With a score of 28.3, the Global Hunger Index ranks Nigeria 103rd out of 116 and classifies the country’s hunger level as serious. This is a result of the country’s growing food insecurity, which has risen to more than 80 per cent from less than 20 per cent about three decades ago.

Unity Bank has led some of the most important critical interventions in the agric sector in Nigeria in the recent past and boasts significant investment in the Agric sector over the past six years and a track record of financing smallholder farmers that spur food production through the Anchor Borrowers’ Programme of the Central Bank of Nigeria (CBN).

Through a CSR initiative that feeds households in underserved communities, the Bank is redefining CSR through strategic interventions that align perfectly with its business model.

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Banking

FCCPC Records Decline in Complaints from Customers of Digital Loan Sharks

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customers of digital loan sharks

By Adedapo Adesanya

The Federal Competition and Consumer Protection Commission (FCCPC) says it has recorded a significant reduction in the number of consumer complaints regarding illegal digital money lending activities.

Mr Babatunde Irukera, the Executive Vice Chairman of the commission, said this in a statement via the agency’s Twitter handle on Wednesday.

Mr Irukera attributed the reduction in complaints from customers of digital loan sharks to the enforcement embarked on by the FCCPC joint taskforce.

“I agree that some activities of digital money lending institutions have destroyed relationships, whether professional or personal, and that is why we are doing all we can.

“I will be the first person to agree that there is a problem out there.

“Messages are still coming, harassment is still coming, but frankly, we have been tracking this for a while,” he added.

The FCCPC boss said that the complaints were the lowest recorded in the last two years, following several enforcements embarked by the commission.

“This is the lowest it has been in two years. From March, when we started this enforcement, there has been a significant reduction.

“I will say that after our enforcement last month, we counted probably less than 25 per cent looking at the tracking of the complaints that came in.

“But 25 per cent is not it, we will keep doing what we are doing, even adding more,” Mr Irukera said.

He said that the task force would continue to set the guard rails and make the loan shark businesses difficult.

“Wherever we find their bank accounts, we lock it down, whatever applications they are using, we go to google, we take them down,’’ Mr Irukera said.

He said that in pursuant to the order of the commission, Google had taken down over 70 applications, and the FCCPC had locked out over 60 bank accounts.

The executive vice chairman said Flutterwave had also taken down a dozen applications.

Mr Irukera appealed to members of the public to send their complaints relating to illegal money lending activities to lenderstaskforce@fccpc.gov.ng.

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