Bankers Crave Functional Judiciary to Battle Rising NPLs

With the recent revelations and purges in the Nigerian judicial system, the Chartered Institute of Bankers of Nigeria (CIBN) has stressed the importance of a functional legal system in recovery of the bad loans that has plagued the banking industry.
According to the President and Chairman of Council of the Institute, Professor Segun Ajibola, the menaces of delinquent debts and financial crimes are impinging on the abilities of the banking sector to discharge it’s critical role in the economy.
The level of non performing loans in the Nigerian banking industry has been on the rise in recent times rising to 11.7 per cent as at June 2016. NPLs in Nigerian banking industry rose by 158 per cent from 5.3 percent or N649.63 billion as at December 31, 2015 to N1.68 trillion by June 30, 2016 according to the Central Bank of Nigeria ( CBN).
Ajibola while speaking at the 16th National Seminar on Banking and Allied Matters for Judges stressed that a well functioning legal system is critical to resolving the lingering problems of non performing loans and financial crimes in the country.
He noted that while there are existing laws to deal with these twin issues, “they have continued to rear their ugly heads. It is therefore important for concerted efforts to be made to redress this situation.”
Ajibola said the theme of the seminar “Emerging Challenges in Debt Recovery and Financial Crimes” was apt “considering the persistent increase in the number of loan defaults and the alarming dimension financial crimes have taken in the country with reports in particular of ever increasing number of ATM/Card-Related cases.
“Every single loan created by a bank is a product of financialisation made possible by mobilised funds in the bank’s kitty, either in equity or deposit form. Any portion of such loan lost to a recalcitrant borrower is therefore an impairment of the bank’s equity of deposit portfolio.
“Bad loans in the books of banks are a cankerworm, a disincentive to banks to perform their intermediation roles and a direct loss to willing equity holders in the form of opportunity cost of investing in banks. Depositors of different categories may ultimately suffer loss of their hard earned sums invested in the bank.
“The ultimate victim is the Nigerian economy which is rendered prostrate by the attitude of the delinquent borrowers. This is why every stakeholder in the Nigeria’s Project must be concerned about the rising cases of delinquent loans in the banking industry, ditto financial crimes and must join hands together to fight the rampaging monsters” he stated.

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