Business
Bank directors responsible for 40% toxic debts –NDIC
The revelation that more than 40 per cent of Banks’ bad debts are caused by their directors has elicited some concerns among customers and other stakeholders.
Managing Director/Chief Executive Officer of the Nigeria Deposit Insurance Corporation (NDIC) Umaru Ibrahim, had revealed that the banking industry indicated strong fundamentals in regulatory assessment and rating,as regulators were concerned about the rising tide of non performing loans (NPLs) in the banking system in the past 10 years.
Report from AMCON said more than $60.5 billion banks’ loans had already slipped into NPLs.
The MD informed House of Representatives members that as at December 2016, the 25 Deposit Money Banks (DMBs) had total loan portfolio of N18.53 trillion out of which N1.85 trillion or 10 per cent were NPLs where N740 billion or 40 per cent constituted Insider/Directors related loans.
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This was far above regulatory threshold of five per cent for the DMBs.
He said there were 978 microfinance banks, (MFBs) in existence as at December, 2016 with total deposits liabilities of N158 billion and total loans and advances amounting to N195 billion out of which N87.75 billion or 45 per cent were NPLs where N68.25 billion or 35 per cent constituted insider related/directors loans.
But Mr Jude Osoka, a major customer with First Bank said the reaction was not news to most informed stakeholders.
Other customers are of the opinion that until the law on banks’ establishment and management are reviewed, bank directors will continue to have their easy way.
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