The Chairman of the Economic and Financial Crimes Commission (EFCC), Ola Olukoyede, has warned Nigerian banks against granting loans without credible collateral, stating that the practice often leads to insider abuse and a rise in non-performing loans.
Olukoyede issued the warning during a courtesy visit by the Chief Audit Executive of First Bank of Nigeria Limited, Mufutau Abiola, who led a delegation to the Lagos Zonal Directorate 2 of the Commission in Ikoyi.
According to a statement shared on the EFCC’s official X handle on Monday, the anti-graft chief delivered the remarks through the Acting Zonal Director of the Lagos Zonal Directorate 2, Ikoyi, Bawa Kaltungo.
Olukoyede expressed concern over the lending practices of some banks, noting that loans backed solely by personal guarantees, including those of top executives, are insufficient and could put depositors’ funds at risk.
“We have issues with banks’ mode of giving loans. The process often shows insider abuse,” he said.
He emphasised that banks should avoid issuing loans without visible and verifiable collateral, stressing that “top-down loans” approved based on personal guarantees from chief executives or other senior officials do not provide adequate security.
“You cannot give a loan based solely on the personal guarantee of the Chief Executive. This is not security,” he said, adding that banks must ensure proper collateralisation of loans to reduce the rate of defaults.
The EFCC chairman further warned that banks act as custodians of depositors’ funds and should therefore exercise caution in lending decisions.
“A bank is a custodian of depositors’ funds. Granting loans without credible collateral is equivalent to tampering with depositors’ money,” he added.
Olukoyede also advised financial institutions to strengthen their due diligence processes when dealing with customers seeking credit facilities. According to him, even when due diligence is outsourced, banks must ensure there are clear liability clauses to guarantee accountability.
Reaffirming the Commission’s commitment to collaboration with financial institutions, he urged banks to cooperate fully with investigators by promptly releasing staff members when invited for questioning in cases involving 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 said.
Olukoyede also noted that financial crimes often require cooperation with international agencies.
“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 when necessary,” he added.
Earlier, Abiola thanked the leadership of the EFCC for the engagement and said the visit was aimed at strengthening existing cooperation between the bank and the anti-graft agency.
He also urged the Commission to expedite investigations involving the bank’s staff and other related cases, noting that a designated internal team at First Bank handles requests and communications from the EFCC.
