….Says Debtors Exploit Bank Closures To Evade Outstanding Obligations
….Accuses Borrowers Of Using Court Delays, Intimidation To Evade Repayment
….Warns Billions In Outstanding Loans Could Remain Unrecovered As Assets Depreciate
Daud Olatunji
The Nigeria Deposit Insurance Corporation (NDIC) has accused some debtors of failed banks of deliberately frustrating efforts to recover billions of naira in outstanding loans through asset concealment, court delays and intimidation.
The corporation warned that the attitude of the debtors was delaying the recovery of funds belonging to depositors of liquidated financial institutions, particularly those whose deposits exceed the insured limits.
The Director of the Asset Management Department of the NDIC, Ogungbemi Theophilus, raised the concerns on Monday at the Stakeholders’ Seminar and Public Relations Workshop held in Abuja.
Theophilus lamented that some borrowers wrongly assumed that the revocation of a bank’s operating licence automatically relieved them of their financial obligations.
He said some debtors had resorted to hiding their assets, frustrating the service of court processes, employing legal delay tactics and, in some instances, intimidating officials involved in recovery efforts.
He said, “Some debtors of failed banks believe that because a bank’s licence is revoked, they are not obliged to fulfil their responsibilities anymore. They hide assets. They frustrate service. Employ delay tactics in court. Sometimes, they try to intimidate. But we have to always do our job and professionally too.”
The NDIC director described loan recovery as one of the most difficult aspects of liquidating failed banks, stressing that outstanding debts did not disappear following the collapse of the financial institutions.
“A loan that was not repaid when the bank was alive does not become easier to recover when the bank is dead,” he noted.
He warned that prolonged recovery processes could erode the value of assets meant to settle depositors, explaining that unoccupied buildings depreciated, equipment deteriorated and outstanding loans became increasingly difficult to recover with time.
“Every delay slows payment to depositors,” he cautioned.
Theophilus explained that the Asset Management Department was responsible for managing the loans, physical assets and investments of closed deposit money banks, primary mortgage banks and microfinance banks.
He said its responsibilities included recovering outstanding loans, disposing of properties and investments, and converting realised assets into cash for the settlement of uninsured depositors.
According to him, the corporation’s ability to pay depositors whose balances exceed the insured limits depends largely on how successfully it recovers outstanding debts and disposes of assets belonging to the failed institutions.
He disclosed that depositors of deposit money banks, non-interest banks and mobile money operators were insured up to N5m per depositor per bank, while customers of microfinance banks, primary mortgage banks and payment service banks were covered up to N2m.
Although the existing insurance limits fully protected approximately 99 per cent of depositors, he said customers with balances above the thresholds would have to depend on liquidation dividends generated from recovered loans and realised assets.
