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.