Experts urge CBN to prosecute bank directors with bad loans

Dr Uju Ogubunka has urged the Central Bank of Nigeria (CBN) to prosecute bank directors with non-performing loans, saying the move would be a deterrent measure.

Ogubunka, Former Executive Secretary, Chartered Institute of Bankers of Nigeria (CIBN), said this in an interview with the News Agency of Nigeria (NAN) in Lagos, on Tuesday.

He stressed that prosecuting directors associated with non-performing loans was one of the best ways of addressing the challenge.

“We expect the regulators to prosecute them in court and hope for justice, as a deterrent measure to other erring bank staff.

“This is a more innovative approach in tackling bad loans than just only asking the directors to resign without facing the consequences of their actions,” Ogubunka said.

He emphasised that prosecuting bank directors associated with bad loans would enforce corporate governance and engender investors’ confidence.

“This is imperative to ensure credibility in the system and foster economic growth,” Ogubunka said.

Also, Mr Boniface Okezie, President, Progressive Shareholders Association of Nigeria, said the CBN’s decision to check bad loans was timely.

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“Although bank directors are not restrained from securing loans to advance their business interests. However, they should ensure such facilities do not end up becoming non-performing loans.

“Which is not right and does not befit the status of a bank director who ought to be exemplary in his actions,” Okezie said.

He stressed that the CBN’s directive would lead to sanity in the banking sector.

“This punitive measure from the regulator will ameliorate the insider abuse in the banking sector and restore trust in the system.

“Which has been the hallmark of banking practice over the decades,” Okezie said.

NAN reports that the CBN ordered bank directors with non-performing insider-related loans to immediately resign from their positions as part of efforts to strengthen corporate governance and reduce credit risk exposure in the banking sector.

The directive was issued in a circular signed by the acting Director of Banking Supervision, Dr Adetona Adedeji.

In the circular addressed to all banks, the apex bank mandated compliance with insider-related credit limits as stipulated in Section 19 of the Banking and Other Financial Institutions Act, 2020.