The Chairman of the Economic and Financial Crimes Commission (EFCC), Ola Olukoyede, has advised Nigerian banks to avoid issuing loans without reliable collateral, warning that such practices often lead to insider misconduct and a rise in non-performing loans.
Olukoyede gave the caution during a courtesy visit by the Chief Audit Executive of First Bank Plc, Mufutau Abiola, who led a delegation to the Lagos Zonal Directorate 2 of the Commission in Ikoyi.
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According to a statement shared on the EFCC’s X handle on Monday, the chairman, represented by the Acting Zonal Director, Bawa Kaltungo, raised concerns about current lending practices in the banking sector.
He noted that loans backed solely by personal guarantees, including those of senior executives, are insufficient and expose depositors’ funds to risk.
“We are concerned about how banks issue loans. In many cases, the process reflects insider abuse,” he said.
Olukoyede emphasised that financial institutions must refrain from approving loans without tangible and verifiable collateral, stressing that approvals based on top-level guarantees are not secure.
“Granting loans based only on a chief executive’s personal guarantee is not acceptable. There must be credible collateral to back such facilities,” he added.
He explained that ensuring proper collateralisation would significantly reduce the incidence of loan defaults.
The EFCC boss also reminded banks that they hold depositors’ funds in trust, warning that issuing unsecured loans amounts to mismanagement of those funds.
He further urged banks to strengthen their due diligence processes to minimise risks, even when such checks are outsourced.
“Where due diligence is outsourced, there must be clear accountability,” he stated.
Reiterating the Commission’s readiness to collaborate with financial institutions in tackling financial crimes, Olukoyede called on banks to cooperate fully by releasing staff members when required for investigations involving suspected internal complicity.
“When we request your staff, particularly in cases of suspected insider involvement, you must make them available so we can jointly combat financial crimes,” he said.
He added that collaboration is essential to staying ahead of criminal activities, noting that cases are sometimes escalated to international law enforcement agencies when necessary.
In his remarks, Abiola thanked the EFCC for the engagement, stating that the visit was aimed at strengthening the existing partnership between the bank and the Commission.
He also appealed for quicker handling of investigations involving the bank’s staff and disclosed that a dedicated team within the bank manages EFCC-related requests.
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