Lagos – An economist, Mr Chris Nemedia, has called on the Central Bank of Nigeria (CBN) to apply its appropriate sanctions against bank directors who grant loans to customers without collaterals.
Nemedia, a former director in the Economic Research Dept, CBN, suggested this while responding to questions from the News Agency of Nigeria (NAN) in Lagos on Friday.
He said that such sanctions would reduce the rate of bad loans and debts being incurred by banks whose directors perpetrate such acts.
The economist said that one of the sanctions should include the removal of such a director from office to serve as a deterrent to others.
“The CBN needs to enforce its rules so as to lessen the incidence of bad loans being written-off by banks as it is not healthy for the nation and its banking sector.
“However, no bank can do without incurring bad loans but it should be within a manageable limit,” he said.
He noted that banks in the country should ensure that they improved on their risk management portfolio in order to reduce the granting of loans to businesses which they considered are not well structured.
The banks should raise their level of scrutiny to know businesses that they could fund due to the high risk involved.
According to him, too much of bad debt is toxic to banks.
Nigeria Deposit Insurance Corporation (NDIC) on Thursday revealed that some bank directors were responsible for 40 per cent of the N1.85 trillion non-performing loans or bad loans in banks.
The corporation also revealed that some of the banks’ directors were responsible for about 40 percent of N139.45 billion bad loans in microfinance and mortgage banks.
The Managing Director/Chief Executive, NDIC, Alhaji Umaru Ibrahim, disclosed this while defending the corporation’s 2017 budget before the House of Representatives’ Committee on Appropriation.
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