Don’t grant loans without collateral, EFCC cautions banks

The Chairman of the Economic and Financial Crimes Commission (EFCC), Ola Olukoyede, has warned Nigerian banks to stop granting loans without credible collateral, saying the practice fuels insider abuse and increases the risk of non-performing loans.

Olukoyede gave the warning during a courtesy visit by the Chief Audit Executive of First Bank of Nigeria Plc, Mufutau Abiola, and his delegation to the Lagos Zonal Directorate 2 of the Commission in Ikoyi.

Speaking through the acting zonal director, Bawa Kaltungo, the EFCC boss criticised lending practices that rely solely on personal guarantees, including those of top executives, describing them as unsafe and insufficient.

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He said such arrangements expose depositors’ funds to risk and reflect insider abuse within the banking system.

“Banks must not issue loans without verifiable collateral. If there is proper collateral for loans obtained by bank customers, this will reduce the rate of non-performing loans” he said.

He stressed that so-called “top-down loans” lack proper security and contribute to rising bad debts.

Olukoyede noted that as custodians of public funds, banks have a responsibility to protect depositors by ensuring that all credit facilities are properly secured.

He also urged financial institutions to strengthen their due diligence processes, adding that outsourced checks must come with clear accountability measures.

The EFCC chairman further called on banks to cooperate fully with investigations, particularly in cases involving suspected insider collaboration, by releasing affected staff promptly when invited by the Commission.

He added that the agency may escalate cases to foreign security bodies where necessary as part of efforts to combat financial crimes.

“When we invite your staff, especially where insider connivance is suspected, you must release them so we can jointly fight economic and financial crimes.

“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 as may be necessary,” he added.