The Nigeria Deposit Insurance Corporation (NDIC), has revealed that it is worried about the loan books of Commercial banks in Nigeria, particularly related party loans.
The NDIC is a government agency that pays depositors a standard cash back after banks had gone under. Related party loans refer to loans give to Directors and Management of banks.
According to a Reuters report, the Managing Director of the Corporation Alhaji Ibrahim, Said he was concerned about an “increasing wave” of non-performing insider loans on the country’s banks
He also expressed concerns about the impact of the loans on Nigerian banks, scared like anyone else that it could lead to a contagion..
“He called for strict compliance with the existing code of conduct and a review of the existing laws and regulations to provide stiffer penalties for directors who take advantage of their positions and failed to pay back their loans”, the NDIC said in a statement.
Bank Directors are often fond of borrowing loans from their commercial banks with the intent of not paying back.
SIMPLE SOLUTION TO NON PAYMENT OF LOANS BY THE DIRECTORS OF BANKS IS BY EMPOWERING THE CENTRAL BANK OF NIGERIA TO FIRST AND FOREMOST LOOK INTO THE CREDIT WORTHINESS OF SUCH DIRECTORS BEFORE SUCH LOANS ARE APPROVED OR GRANTED! THIS SHOULD BE A PERMANENT SOLUTION OF FRAUDS ADVANCED BY THE SO CALLED DIRECTORS.