Concerns have been expressed by industry observers that the Central Bank of Nigeria’s directive to banks about insider loans may lead to some financial report falsification.
These stakeholders told The PUNCH that the warning from the regulator would probably enable the banks to transfer money and hide their activities.
Given the rise in Non-Performing Loans (NPL), TimesNow.com.ng earlier reported that the Central Bank of Nigeria (CBN) ordered bank directors connected to non-performing loans to step down immediately.
This is also part of the bank’s moves to strengthen risk management and corporate governance within the banks and protect shareholders’ funds.
Banks were directed to make sure that all deadlines for insider-related loans that have been approved by the CBN are strictly adhered to.
Any inability to meet the deadlines will be regarded as a violation of the regulations and could result in further penalties.
How experts react
Rotimi Fakayejo, an economic and financial specialist, pointed out that book juggling was a possibility even though there might be compliance with some directors stepping down.
He said:
According to Fakayejo, acquiring the impacted directors’ shares could be simpler than selling off other assets, and they can be quickly acquired without creating a glut.
An insider at a tier-1 bank who spoke on the condition of anonymity said,
The source added that this directive requires quick action on the part of the CBN.
He said,
TimesNow.com.ng reported that according to recent data released by the Central Bank of Nigeria (CBN), microfinance banks accounted for 95.66% of bank loans in 2024.
The information, which includes loan transactions from September 2024, demonstrates how important microfinance institutions are to both small enterprises and individuals.
According to the PUNCH, microfinance banks aggregated an amazing 6,253 borrowers from a total of 6,537 debtors across all credit classes.
Source: TimesNow.com.ng
