EFCC, Police to Go After Loan Defaulters
Get presidential directive, says NDIC MD
From Efem Nkanga and Francis Ndubuisi in Uyo
Managing Director of Nigeria Deposit Insurance Corporation (NDIC), Mr. Ganiyu Ogunleye yesterday said President Olusegun Obasanjo has directed the Economic and Financial Crime Commission (EFCC)/, and the Nigeria Police to track down defaulters of loans granted by failed banks.
The President was said to have given the directive during a presentation by Ogunleye before him in which the NDIC chief revealed amongst other things that debt worth about N24 billion was yet to be recovered by banks that are underliquidation.
Ogunleye also revealed that within 10 years (1994 to 2004), 36 banks had been liquidated, while N3.3 billion insured deposits out of N5.2 billion total insured amount had been paid as at June 2004. He added that the NDIC had been experiencing "frustrations" over the recovery process as well as litigations over its liquidation exercises.
Speaking to State House Correspondents shortly after the presentation, Ogunleye stated that "presently, we have about N30 billion of debts in banks in liquidation and we have recovered almost close to N6 billion."
"If these people do not pay their debts, we will not be able to pay depositors. Although, we have obligation to pay the insured deposits.
"We are aware that many depositors have far more than what is insured and we have to realise the assets to pay them," he noted.
President Obasanjo had while commending the NDIC for its achievements so far, promised that the Federal Government would assist the corporation to perform better, especially in removing legal constraints to liquidating ailing banks and recovering debts," he said.
Ogunleye, however, urged the NDIC to do more to protect small depositors in order to restore their confidence in the banking/insurance sector and urged all Nigerians to create more public awareness of its activities, especially among small savers who had not come forward to claim their insured deposits in liquidated banks.
The President added that banks and insurance companies must be tools for development. He noted that "every aspect of banking and insurance must be a tool for development of the economy" by supporting agriculture, industrieis and housing.
The Managing Director who pointed out that the President, expressed concern about the huge debt profile and the refusal of the defaulters to pay up. He "assured us that he would give us the necessary assistance to enable us achieve our objectives," Ogunleye said.
"The President has even directed that some cases be referred to the police, while some be referred to EFCC and there are some that he will have cause to talk to people," he added.
While emphasising the importance of effective debt recovery machinery, the Managing Director said "we have experienced delays and people also tried to seek injunctions as well as use delay tactics. So, we have cases that have been dragging on in the courts."
He suggested that "the best way out is to get the collaboration of law enforcement agents, the police and the EFCC to put pressure on them. If Mr. President or government machinery is used to put pressure, clearly they will realise the need to pay their debts.
"For us, this issue is a major concern because if you cannot recover debt, you cannot pay the un-insured deposits and depositors are suffering and we are not happy about it and this is why we felt we need the intervention," he added.
The problem of non-performing loans and advances has been and is still one of the greatest challenges facing the banking industry and eating the main fabric of the economy.
The NDIC annual report for 2003, for instance, noted that the volume of non-performing loans in the banking industry rose from N47 billion in 1994 to N199.62 billion in 2002 and increased further to N260.17 billion in 2003.
Speaking recently on "Implications of The Scrapping of The Failed Banks tribunal on NDIC's Role as Bank Liquidator" Head, Legal Department/Board Secretary, NDIC, Mr.Alheri Bulus Nyako disclosed that the problem of bad loans has been further compounded by the fact that most of the loans were products of insider abuse or otherwise granted under fraudulent circumstances.
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