The Nigeria Deposit Insurance Corporation (NDIC) has warned debtors of failed banks against concealing assets and deploying legal and intimidation tactics to frustrate the recovery of outstanding loans owed to liquidated financial institutions.
The corporation said deliberate efforts by borrowers to evade repayment were slowing the recovery of funds belonging to depositors and affecting its ability to settle outstanding claims arising from bank liquidations.
The Director of the Asset Management Department of the NDIC, Ogungbemi Theophilus, raised the concerns on Monday at the corporation’s Stakeholders’ Seminar and Public Relations Workshop in Abuja.
Theophilus explained that some borrowers wrongly assumed that the revocation of a bank’s operating licence automatically extinguished their financial obligations to the institution.
He stressed that outstanding loans remained recoverable obligations even after a financial institution had been closed and placed under liquidation.
According to him, the corporation frequently encounters debtors who conceal assets, frustrate the service of court processes, employ unnecessary legal delays and intimidate officials involved in recovery operations.
He described loan recovery as one of the most challenging aspects of bank liquidation, noting that the collapse of a financial institution does not make the recovery of outstanding credit facilities easier.
The NDIC director warned that prolonged recovery proceedings could significantly reduce the value of recoverable assets, particularly physical properties that deteriorate or lose market value over time.
He explained that delays in recovering loans and disposing of assets could ultimately reduce the pool of funds available for distribution to depositors and other eligible claimants.
The corporation’s recovery activities are particularly important in protecting depositors and strengthening confidence in Nigeria’s financial system, as funds recovered from debtors form part of the resources available for settling obligations of failed banks.
The NDIC reiterated the importance of cooperation among stakeholders, including borrowers, legal practitioners, financial institutions and relevant government agencies, in ensuring that liquidation proceedings are concluded efficiently.
It also emphasised that borrowers cannot use the failure of a bank as an excuse to avoid their contractual repayment responsibilities.
